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IAS 8 Amendments: Accounting policies and Accounting Estimates


​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.

Current status

​​​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 intiial 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.

Lastly, EFRAG recommended that the proposed amendments are delayed and then grouped with other amendments to IAS 8 on accounting policy changes arsing from agenda decisions of the IFRS Interpretations Committee to avoid repeated changes to the Standard in a very short period of time.

The final comment letter is available here.

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