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Definition of Accounting Estimates (Amendments to IAS 8)


​Project history

In September 2014, the IFRS Interpretations Committee informed the IASB about divergent practices regarding the assessment of whether a change represents a change in an accounting policy, or in an accounting estimate, in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

On 12 September 2017, the IASB published Exposure Draft ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8) which proposes to:

  • Clarify the definitions of accounting policies and provide a definition of accounting estimates with the objective of making them more concise and distinctive;
  • Clarify how accounting policies and estimates relate to each other;
  • Clarify that changes in valuation techniques and changes in estimation techniques are changes in accounting estimates; and
  • Clarify that a change in the cost formulas of IAS 2 Inventories in determining the cost of interchangeable inventories is a change in accounting policy.

On 29 September, EFRAG published a draft comment letter in response to the IASB's consultation which was open for comments until 7 December 2017. On 8 January 2018, EFRAG published its final comment and a feedback statement summarising the input received in response to its consultation which largely supportive of its initial views.

In its comment letter, EFRAG:

  • Supported the IASB's initiative to clarify the definition of accounting policies and to provide a definition of accounting estimates but considered that the proposals may not deliver sufficient clarification unless supported by additional illustrative examples;
  • Agreed with the proposed clarification that changes in valuation techniques and changes in estimation techniques are changes in accounting estimates; and
  • Acknowledged the need to address the diversity in practice regarding changes in the cost formulas of interchangeable inventories but recommended that the proposed guidance is placed in IAS 2 Inventories to avoid any application by analogy to other circumstances.

The final comment letter is available here.

Current status

The IASB issued the Amendments on 12 February 2021.

At its March meeting, EFRAG TEG agreed to recommend a draft endorsement advice which was subsequently approved by the EFRAG Board by written procedure. EFRAG's preliminary assessment was that the Amendments satisfy the criteria for endorsement for use in the EU and therefore recommends its endorsement. 

The draft endorsement advice was issued on 15 March 2021 with comments requested by 7 June 2021. EFRAG's final endorsement advice, reiterating the recommendation to endorse was published on 8 July 2021 and can be found here . 

Next Steps

EFRAG has completed its diligences regarding its endorsement advice.


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