IAS 8 – Hierarchy of guidance to select an accounting policy (new)
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors - Hierarchy of guidance to select an accounting policy
The Committee considered a request to clarify the guidance in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors regarding the use of management's judgement in developing and applying accounting policies, when a particular event, transaction or other condition is not specifically addressed by IFRSs.
The request specifically asks for clarification, when applying the IAS 8 hierarchy, on whether management is required to incorporate into an accounting policy:
- only certain aspects of the treatment prescribed by IFRSs for similar transactions which management judges necessary to produce information that is relevant and reliable, or
- all aspects of the treatment prescribed by IFRSs for similar transactions regardless of the existence of a potential impact on the relevance and reliability of the information presented.
After a short discussion, the Committee agreed not to add the issue to its agenda. However, the Committee determined that the agenda decision should clarify that paragraph 10 of IAS 8 gives the principle to be applied, and that paragraphs 11 and 12 provide the process by which paragraph 10 should be applied. The Committee expects that judgement will be exercised when analogising to another standard, and that each analogy should include full consideration of the entire standard, subsequently using only the parts of the standard considered to be relevant and excluding those which are determined as not relevant to the issue.