IASB issues amendments to IFRS relating to policy disclosures, estimatesThe board has set out amendments to IAS 1, IAS 8, and IFRS Practice Statement 2.
The International Accounting Standards Board (IASB) issued Friday a series of narrow-scope amendments to IFRS in order to:
- Improve accounting policy disclosures so that they provide more useful information to investors and other primary users of the financial statements; and
- Distinguish changes in accounting estimates from changes in accounting policies.
The amendments are to:
IAS 1, Presentation of Financial Statements. These amendments require companies to disclose their material accounting policy information rather than their significant accounting policies.
IFRS Practice Statement 2, Making Materiality Judgements. These amendments provide guidance on how to apply the concept of materiality to accounting policy disclosures.
IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. These amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates.
That change is important, the IASB said, as “changes in accounting estimates are applied prospectively only to future transactions and other future events, but changes in accounting policies are generally also applied retrospectively to past transactions and other past events”.
The amendments to IAS 1 and IAS 8 will be effective for annual reporting periods beginning on or after 1 January 2023, with early application permitted.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.