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The financial reporting requirements in IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors treat changes in accounting policies and errors differently from changes in estimates. Changes in an accounting policy and corrections of errors are applied retrospectively whereas changes in estimates are accounted for prospectively and a third balance sheet is required to be presented for a change in an accounting policy. Additionally, the conditions for making an accounting policy change are more constrained than for changing an estimate. As long as these accounting differences remain in effect it will be important to provide clear guidance to help preparers distinguish, and users understand the difference, between a change in an accounting policy and a change in an estimate.
Deloitte agrees with the Board that there is insufficient guidance in IAS 8 for those that apply IFRS to distinguish between changes in accounting policies and changes in accounting estimates consistently. Deloitte is regularly required to consider this distinction and many of its clients find it difficult to identify a clear principle in IAS 8. Deloitte supports the goals of promoting greater consistency and improving the accounting and the information available to the primary users of the financial statements.
However, Deloitte´s assessment is that the proposed changes will not provide the clarity that stakeholders need to distinguish between a change in estimate and a change in accounting policy to the extent expected. In particular, Deloitte is concerned that the proposed amendment in relation to changes in an inventory cost formula suggests that some changes to how a measurement basis is calculated are changes in accounting policies without providing sufficient clarity to help users assess the principles applied in making this decision.