Background

Applying IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, an entity changes an accounting policy only if the change is required by an IFRS standard or results in improving the usefulness of information provided to users of its financial statements. However, a common reason why an entity voluntarily changes an accounting policy is to reflect non-authoritative explanatory material included in agenda decisions published by the IFRS Interpretations Committee.

To facilitate voluntary changes in accounting policy that result from an agenda decision, the Board intends to amend IAS 8 to lower the impracticability threshold for retrospective application of such changes.

Suggested changes

The changes proposed in ED/2018/1 Accounting Policy Changes (Proposed amendments to IAS 8) are focused on a cost benefit analysis:

• If an entity changes an accounting method as a result of an agenda decision by the IFRS Interpretations Committee, it does a cost-benefit assessment: If the entity's cost of determining the period-specific effects or the cumulative effect of the change exceeds the expected benefits to users of the financial statements, the new accounting policy need not be applied retrospectively.
• In addition, the Board proposes to include corresponding application guidance for the cost-benefit assessment in the standard.

Effective date

The exposure draft does not contain a proposed effective date, which the Board intends to decide on after the exposure.

Additional information

Review the press release and the exposure draft on the Board's website.