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24/04/2018 - EFRAG's draft comment letter on the IASB's ED/2018/1 Accounting Policy Changes (Proposed amendments to IAS 8)

​EFRAG has published its draft comment letter in response to the IASB's Exposure Draft ED/2018/1 Accounting Policy Changes (Proposed amendments to IAS 8) (the 'ED') and seeks constituents' views on the proposals. Comments on the draft comment letter are requested by 13 July 2018, by close of business.

​On 27 March 2018, the IASB issued the ED with the aim to promote greater consistency in the application of IFRS Standards and to reduce the burden on entities when they change an accounting policy as a result of an agenda decision issued by the IFRS Interpretations Committee.

The ED proposes to amend IAS 8 to lower the threshold for relief from retrospective application of such changes by allowing an assessment based on costs to the entity and expected benefits to users. Applying the amendment, an entity would be required to apply voluntary changes in accounting policies resulting from agenda decisions either:

  • from the earliest period practicable: or
  • from the earliest date for which the expected benefits for users would exceed the costs for preparers.

In its draft comment letter, EFRAG does not support the proposals in the ED insofar as EFRAG disagrees with introducing a distinction between voluntary changes in accounting policies resulting from agenda decisions and other voluntary changes. EFRAG considers that the proposals in the ED raise broader questions about the status and the objectives of agenda decisions.

EFRAG also considers that the proposals in the ED may give rise to practical challenges if finalised in their current form and that further guidance will be needed to:

  • clarify their scope and in particular the potential pervasiveness of agenda decisions beyond the fact patterns addressed in the submissions; and
  • help preparers assess the benefits for users.

Lastly, EFRAG reiterates its suggestions to the IASB to reconsider whether some additional clarification on the distinction between a change in accounting policy and correction of an error would be useful in finalising the amendments contained in this ED and in the one issued in September 2017.

EFRAG's draft comment letter is available here. ¤

Please submit your comments by clicking on the 'Comment publication' link below.