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Other standards

IAS 8 Accounting Policies, Changes in

Accounting Estimates and Errors

1.1 Definition of accounting policies

‘Accounting policies are the specific principles, bases, conventions, rules and
practices applied by an entity in preparing and presenting financial statements’
(IAS 8, para 5).

1.2 Selection of accounting policies

IAS 8 requires an entity to select and apply appropriate accounting policies to ensure
that the information in financial statements

 is relevant to the decision-making needs of users, and

 faithfully represents the entity’s performance and position.

1.3 Changes in accounting policy

 applied retrospectively, as if new policy had always been in place

 restate comparatives

 restate relevant brought forward balances

1.4 Changes in accounting estimate

 applied prospectively, from current period onwards

 disclose, if impact is material

An example of a change in accounting estimate would be a change in the estimated
useful life of a non-current asset (see Chapter 2 of the Study Text).

1.5 Errors

 applied retrospectively, amending error

 restate affected comparatives

 restate relevant brought forward balances

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