04/10/2019 - EFRAG draft comment letter on the IASB Exposure Draft ED/2019/6 Disclosure of Accounting Policies (Proposed Amendments to IAS 1 and IFRS Practice Statement 2)
EFRAG has published its draft comment letter in response to the IASB's Exposure Draft ED/2019/6 Disclosure of Accounting Policies (Proposed Amendments to IAS 1 and IFRS Practice Statement 2) and seeks constituents' views on the proposals. Comments are requested by 22 November 2019.
On 1 August 2019 the IASB issued Exposure Draft ED/2019/6 Disclosure of Accounting Policies (Proposed Amendments to IAS 1 and IFRS Practice Statement 2).
The ED proposes to amend IAS 1 Presentation of Financial Statements to require entities to disclose material rather than significant accounting policies. To support this amendment the IASB also developed guidance and examples to explain and demonstrate the application of materiality to accounting policy disclosures, both in IAS 1 and in IFRS Practice Statement 2 Making Materiality Judgements.
In the draft comment letter, EFRAG supports the proposal to replace the undefined reference to 'significance' with the defined concept of 'materiality'. This, with other Disclosure Initiative projects, may help entities to identify and disclose accounting policies that provide material information to users and the connection to the application of materiality to other information.
However, EFRAG notes the possible inconsistencies of the proposed guidance with the existing disclosure requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors regarding accounting policies choices and changes.
EFRAG also welcomes the proposed guidance and examples to help entities determine when an accounting policy is material and suggests some improvements.
The draft comment letter is available here.
EFRAG requests comments on its draft comment letter by 22 November 2019. You can comment on EFRAG's draft comment letter by clicking on the 'Comment publication' link below.