Chapter 1: Introduction, Objective and Scope

Overview of IAS 8

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors is applied in selecting and applying accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors. IAS 8 requires compliance with any specific Standard or Interpretation applying to a transaction, event or condition, and provides guidance on developing accounting policies for other items that result in relevant and reliable information.

Changes in accounting policies and corrections of errors are generally accounted for retrospectively, whereas changes in accounting estimates are generally accounted for on a prospective basis.

• IAS 1 Presentation of Financial Statements sets out the disclosure requirements for accounting policies (excluding changes in accounting policies);
• IAS 8 deals with the accounting and disclosure requirements regarding changes in accounting policies, changes in accounting estimates and the correction of errors.

Objective

The objective of this Standard is to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors.

The Standard is intended to enhance the relevance and reliability of an entity’s financial statements, and the comparability of those financial statements over time and with the financial statements of other entities.

Disclosure requirements for accounting policies, except those for changes in accounting policies, are set out in IAS 1 Presentation of Financial Statements.

Scope

This Standard shall be applied in selecting and applying accounting policies, and accounting for changes in accounting policies, changes in accounting estimates and corrections of prior period errors.

The tax effects of corrections of prior period errors and of retrospective adjustments made to apply changes in accounting policies are accounted for and disclosed in accordance with IAS 12 Income Taxes.