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Chapter 3

Policies, estimates and errors

3.1 Accounting policies

Accounting policies are the principles and rules applied by an entity
which specify how transactions are reflected in the financial statements.

To increase comparability, IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors says that accounting policies should be kept the same from
period to period. Changes should only be made if required by an IFRS Standard or if
they will result in more reliable or relevant presentation in the financial statements.

If an accounting policy is changed then it is adjusted retrospectively:

 Comparative information is re-stated as if the new policy had
always been applied

 The opening retained earnings balance in the statement of
changes in equity is adjusted.

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