How to account for changes in accounting policies as a result of IFRS Interpretations Committee agenda decisions

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors currently only prescribes how to account for changes in accounting policies arising from initial application of an accounting standard and voluntary changes in accounting policies.

Initial application of an accounting standard

IAS 8, paragraph 19 requires these to be accounted for in accordance with the specific transitional requirements of the standard, and if there are none, then to restate comparatives retrospectively.

Voluntary changes in accounting policies

IAS 8, paragraph 19(b) also requires the impact of voluntary changes in accounting policies to be accounted for retrospectively, i.e. comparatives are restated.

Limits of retrospective restatement

If it is impracticable to quantify either the impact on the comparative period, or the cumulative effect on the opening balance sheet, IAS 8, paragraphs 24 and 25 provide some relief to permit restatement back to the time when retrospective adjustment is practicable, which could be at the beginning of the current period.

How to deal with changes in accounting policies as a result of IFRS Interpretations Committee agenda decisions

As noted in our article Recent agenda decisions by the IFRS Interpretations Committee, agenda decisions of the IFRS Interpretations Committee, although not authoritative guidance, in practice are regarded as being highly persuasive, and entities may voluntary change accounting policies in light of these. Because of their non-authoritative status, any resulting change is not a change required by IFRS Standards, and therefore any transitional requirements that may have been available on first time adoption of the standard do not apply, meaning retrospective restatement is required for these voluntary changes.

Proposals in this exposure draft

Applying a new policy as a result of agenda decisions can be challenging in practice because IAS 8 requires the new policy to be applied as if it had always applied to the entity, except if it is impracticable to do so. ‘Impracticable’ is a very high hurdle to meet under IFRS standards.

The International Accounting Standards Board (IASB) is therefore proposing to lower the ‘impracticability’ threshold for retrospective application of policy changes as a result of agenda decisions. Instead, cumulative adjustments can be avoided if the cost to the entity of determining these retrospective adjustments exceed the benefits to users.

Paragraphs A6-A10 are proposing guidance on assessing expected benefits vs costs and judgement is required.

Comments close

The deadline for comments on these proposed changes to the IASB close 27 July 2018. Please contact Aletta Boshoff if you have any feedback on these proposals.

Subscribe to Corporate Reporting Insights


This publication has been carefully prepared, but is general commentary only. This publication is not legal or financial advice and should not be relied upon as such. The information in this publication is subject to change at any time and therefore we give no assurance or warranty that the information is current when read. The publication cannot be relied upon to cover any specific situation and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact the BDO member firms in Australia to discuss these matters in the context of your particular circumstances.

BDO Australia Ltd and each BDO member firm in Australia, their partners and/or directors, employees and agents do not give any warranty as to the accuracy, reliability or completeness of information contained in this article nor do they accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it, except in so far as any liability under statute cannot be excluded. Read full Disclaimer.