On or about 2 August 2019, the Accounting Standards Council (ASC) invites comments on Exposure Draft ED/2019/6 Disclosure of Accounting Policies (Proposed amendments to IAS 1 and IFRS Practice Statement 2) by 18 October 2019. The compiled comments would then be summarised and forwarded to the IASB.
On or about 1 August 2019, the International Accounting Standards Board (IASB) has published the Exposure Draft ED/2019/6. Comments are requested by 29 November 2019.
The proposed changes aim at assisting entities in providing accounting policy disclosures that are more useful to primary users of financial statements. The IAS 1 entails entities to disclose their “significant” accounting policies. The ED proposes to replace this requirement with a requirement to disclose “material” accounting policies.
The ED proposes changes to assist entities in applying the concept of materiality in making decisions regarding accounting policy disclosures. The proposed amendments to paragraphs 117-122 of IAS 1 in the following ways:
- Paragraph 117 of IAS 1 would be amended to require an entity to disclose its material accounting policies instead of its significant accounting policies;
- Paragraphs 117A-D of IAS 1 would be added to explain how an entity can identify a material accounting policy (for example an accounting policy has changed during the reporting period, was chosen from alternatives allowed in IFRSs, was developed in accordance with IAS 8 in the absence of an IFRS that specifically applies, relates to an area of significant judgement and assumption, or reflects unique entity-specific application of an IFRS);
- Paragraph 122, which requires an entity to make disclosures about ‘other judgements’, would be retained but would see a minor amendment to replace the reference to ‘significant accounting policies’ with the reference to ‘material accounting policies’.
The IASB has also developed additional guidance to be included in the Materiality Practice Statement for entities to use when applying the four-step materiality process to accounting policy disclosure. This additional guidance is supported by two new examples that highlight the need to focus on information that is useful to users of financial statements and demonstrate how the application of the four-step materiality process can address the issues of:
- boilerplate or generic information being disclosed in accounting policies that are material to the financial statements; and
- instances in which accounting policy disclosures contain only information that repeats the requirements of IFRSs.
Source: ASC website, 2 August 2019