IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition

IPSAS 3: Accounting Policies, Changes in Accounting Estimates and Errors

Objective

This standard governs the process of selecting and changing accounting policies, as well as the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and the corrections of errors. IPSAS 3 sets out a hierarchy of authoritative guidance for management to consider in the absence of a standard that specifically applies to an item. The standard is intended to enhance the relevance and reliability of a public sector entity's financial statements as well as comparability of those financial statements over time and with the financial statements of other entities.

Disclosure requirements for accounting policies, except those for changes in accounting policies, are set out in IPSAS 1, Presentation of Financial Statements”.

The IFRS on which the IPSAS is based

IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors

Content

Principal definitions

Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

Retrospective application is applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied.

Prospective application of a change in accounting policy and of recognizing the effect of a change in an accounting estimate, respectively, are

(a) Applying the new accounting policy to transactions, ...