On or about 12 February 2021, the International Accounting Standards Board (IASB) has issued a narrow-scope amendments to the IFRS Standards.
The amendments will help companies:
- 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 to:
- IAS 1 Presentation of Financial Statements require companies to disclose their material accounting policy information rather than their significant accounting policies,
- IFRS Practice Statement 2 Making Materiality Judgements provide guidance on how to apply the concept of materiality to accounting policy disclosures, and
- IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors clarify how companies should distinguish between changes in accounting policies and changes in accounting estimates. That distinction is important as changes in accounting estimates are applied prospectively only to future transactions and future events, but changes in accounting policies are generally also applied retrospectively to past transactions and 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.
Source: IFRS, 13 February 2021