The IFRS Foundation has today published a guide to help companies determine their accounting policies when preparing IFRS financial statements.
IAS 8 Accounting Policies, Changing in Accounting Estimates and Errors specifies the requirements for selecting and applying accounting policies.
In the absence of an IFRS Standard that specifically applies to a transaction, other event or condition, management uses its judgement in developing and applying an accounting policy that results in information that is reliable and relevant to an investor’s economic decision-making needs.
Guide to Selecting and Applying Accounting Policies—IAS 8 presents a three-step process to developing accounting policies. An illustrative example accompanies each step to help explain when a company might apply that step.
This figure illustrates the three-step process:
Selecting and applying an accounting policy