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An entity must apply consistent accounting policies in a period to deal with similar transactions, and other events and circumstances, unless IFRS specifically requires or permits categorization of items for which different policies may be appropriate
Changes in accounting policies Users of financial statements need to be able to compare financial statements of an entity over time, so that they can identify trends in its financial performance or financial position.
Frequent changes in accounting policies are therefore undesirable because they make comparisons with previous periods more difficult.
The same accounting policies must be applied within each period and from one period to the next unless a change in accounting policy meets one of the following criteria.
A change in accounting policy is permitted only if the change is:
required by IFRS; or
results in the financial statements providing reliable and more relevant financial information.
A new or revised standard usually include specific transitional provisions’ to explain how the change required by the new rules should be introduced. In the absence of specific transitional provisions, a change in policy should be applied retrospectively.
This is explained shortly. Determining when there is a change in accounting policy A change in accounting policy can be established as follows.
The accounting policies chosen by an entity should reflect transactions and events through:
recognition (e.g. capitalising or writing off certain types of expenditure); measurement (e.g. measuring non-current assets at cost or valuation); and presentation (e.g. classification of costs as cost of sales or administrative expenses).
Changes in accounting policies Users of financial statements need to be able to compare financial statements of an entity over time, so that they can identify trends in its financial performance or financial position.
Frequent changes in accounting policies are therefore undesirable because they make comparisons with previous periods more difficult.
The same accounting policies must be applied within each period and from one period to the next unless a change in accounting policy meets one of the following criteria.
A change in accounting policy is permitted only if the change is:
required by IFRS; or
results in the financial statements providing reliable and more relevant financial information.
A new or revised standard usually include specific transitional provisions’ to explain how the change required by the new rules should be introduced. In the absence of specific transitional provisions, a change in policy should be applied retrospectively.
This is explained shortly. Determining when there is a change in accounting policy A change in accounting policy can be established as follows.
The accounting policies chosen by an entity should reflect transactions and events through:
recognition (e.g. capitalising or writing off certain types of expenditure); measurement (e.g. measuring non-current assets at cost or valuation); and presentation (e.g. classification of costs as cost of sales or administrative expenses).
