Join Your Exam WhatsApp group to get regular news, updates & study materials HOW TO JOIN

Changes from previous requirements IFRS standards 8

Changes from previous requirements IFRS standards 8

Changes from previous requirements IFRS standards 8: International Accounting Standard 8 Accounting Policies, Changes in Accounting Estimates and Errors or IAS 8is an international financial reporting standard (IFRS) adopted by the International Accounting Standards Board (IASB). It prescribes the criteria for selecting and changing accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors.

The standard requires compliance with IFRSs which are relevant to the specific circumstances of the entity. In a situation where no specific guidance is provided by IFRSs, IAS 8 requires management to use its judgement to develop and apply an accounting policy that is relevant and reliable.[1] Changes in accounting policies and corrections of errors are generally accounted for retrospectively, unless this is impracticable; whereas changes in accounting estimates are generally accounted for prospectively.

IAS 8 was issued in December 1993 by the International Accounting Standards Committee, the predecessor to the IASB. It was reissued in December 2003 by the IASB.

 IAS 8: History

October 1976Exposure Draft E8 The Treatment in the Income Statement of Unusual Items and Changes in Accounting Estimates and Accounting Policies
February 1978IAS 8 Unusual and Prior Period Items and Changes in Accounting Policies
July 1992Exposure Draft E46 Extraordinary Items, Fundamental Errors and Changes in Accounting Policies
December 1993IAS 8 (1993) Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies (revised as part of the ‘Comparability of Financial Statements’ project)
1 January 1995Effective date of IAS 8 (1993)
18 December 2003Revised version of IAS 8 issued by the IASB
1 January 2005Effective date of IAS 8 (2003)

Changes from previous requirements IFRS standards 8

Changes from previous requirements IFRS standards 8: The International Financial Reporting Standards, usually called the IFRS Standards,are standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB) to provide a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. They are the rules to be followed by accountants to maintain books of accounts which are comparable, understandable, reliable and relevant as per the users internal or external. IFRS, with the exception of IAS 29 Financial Reporting in Hyperinflationary Economies and IFRIC 7 Applying the Restatement Approach under IAS 29, are authorized in terms of the historical cost paradigm. IAS 29 and IFRIC 7 are authorized in terms of the units of constant purchasing power paradigm.

IFRS began as an attempt to harmonize accounting across the European Union but the value of harmonization quickly made the concept attractive around the world. However, it has been debated whether or not de facto harmonization has occurred. Standards that were issued by IASC (the predecessor of IASB) are still within use today and go by the name International Accounting Standards (IAS), while standards issued by IASB are called IFRS. IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new International Accounting Standards Board (IASB) took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards calling the new standards “International Financial Reporting Standards”.

Changes from previous requirements IFRS standards 8

The objective of this Standard is to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. The Standard is intended to enhance the relevance and reliability of an entity’s financial statements, and the comparability of those financial statements over time and with the financial statements of other entities.

Disclosure requirements for accounting policies, except those for changes in accounting policies, are set out in IAS 1 Presentation of Financial Statements.

The following terms are used in this Standard with the meanings specified: Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset, that results from the assessment of the present status of, and expected future benefits and obligations associated with, assets and liabilities.

Changes from previous requirements IFRS standards 8

Changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors. International Financial Reporting Standards (IFRSs) are Standards and Interpretations issued by the International Accounting Standards Board (IASB). They comprise:

  1. International Financial Reporting Standards.
  2. International Accounting Standards.
  3. IFRIC Interpretations.
  4. SIC Interpretations.

1Material Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances. The size or nature of the item, or a combination of both, could be the determining factor. Prior period errors are omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

  1. was available when financial statements for those periods were authorised for issue
  2. could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.

Changes from previous requirements IFRS standards 8

Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud. Retrospective application is applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied. Retrospective restatement is correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occurred. Impracticable Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so.

For a particular prior period, it is impracticable to apply a change in an accounting policy retrospectively or to make a retrospective restatement to correct an error if

(a)the effects of the retrospective application or retrospective restatement are not determinable

(b) the retrospective application or retrospective restatement requires assumptions about what management’s intent would have been in that period; or

(c) the retrospective application or retrospective restatement requires significant estimates of amounts and it is impossible to distinguish objectively information about those estimates that:

(i) provides evidence of circumstances that existed on the date(s) as at which those amounts are to be recognised, measured or disclosed.

(ii) would have been available when the financial statements for that prior period were authorised for issue from other information. Prospective application of a change in accounting policy and of recognising the effect of a change in an accounting estimate, respectively, are:

(a) applying the new accounting policy to transactions, other events and conditions occurring after the date as at which the policy is changed; and

(b) recognising the effect of the change in the accounting estimate in the current and future periods affected by the change.

Changes from previous requirements IFRS standards 8 provides India’s top IFRS faculty video classes – online & in Pen Drive/ DVD – at very cost effective rates. Get IFRS Video classes from  to do a great preparation for primary Student.

Watch IFRS sample video lectures  visit
Watch  IFRS  sample lecture books   visit
Watch IFRS free downloads   visit

Leave a comment

Your email address will not be published. Required fields are marked *