7Accounting Policies, Changes in Accounting Estimates, and Errors

  1. Introduction
  2. Scope
  3. Definitions of Terms
  4. Importance of Comparability and Consistency in Financial Reporting
  5. Accounting Policy
  6. Selecting Accounting Policies
  7. Changes in Accounting Policies
      1. Applying changes in accounting policies
      2. Retrospective application
      3. Impracticability exception
      4. Changes in amortisation method
  8. Changes in Accounting Estimates
  9. Correction of Errors
      1. Impracticability exception
  10. Future Developments
  11. US GAAP Comparison


It is self-evident that a true picture of an entity's performance only emerges after a series of financial periods' results have been reported and reviewed. The information set out in an entity's financial statements over a period of years must, accordingly, be comparable if it is to be of value to the users of those statements. Users of financial statements usually seek to identify trends in the entity's financial position, performance and cash flows by studying and analysing the information contained in those statements. Thus it is imperative that, to the maximum extent possible, the same accounting policies be applied from year to year in the preparation of financial statements, and that any necessary departures from this rule be clearly disclosed. This fundamental prerequisite is the basis for the IFRS requirement for restatement of prior periods' financial statements for corrections of accounting errors and retrospective application of new accounting policies.

Financial ...

Get Wiley Interpretation and Application of IFRS Standards now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.