Changes in Accounting Policies, What to Disclose in the Financial Statements ?

Par. 28 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors states that when initial application of an IFRS has an effect on the current period or any prior period, would have such an effect except that it is impracticable to determine the amount of the adjustment, or might have an effect on future periods, an entity shall dislose :

1. the title of the IFRS;
2. when applicable, that the change in accounting policy is made in accordance with its transitional provisions;
3. the nature of the change in accounting policy;
4. when applicable, a description of the transitional provisions;
5. when applicable, the transitional provisions that might have an effect on future periods;
6. for the current period and each prior period presented, to the extent practicable, the amount of the adjustment :
   • for each financial statement line item affected; and
   • if IAS 33 Earnings per Share applies to the entity, for basic and diluted earnings per share;
7. the amount of the adjustment relating to periods before those presented, to the extent practicable; and
8. if retrospective application required by par. 19(a) or (b) is impracticable for a particular prior period, or for periods before those presented, the circumstances that led to the existence of that condition and a description of how and from when the change in accounting policy has been applied.

Financial statements of subsequent periods need not repeat these disclosures.

Further, par. 29 states that when a voluntary change in accounting policy has an effect on the current period or any prior period, would have an effect on that period except that it is impracticable to determine the amount of the adjustment, or might have an effect on future periods, an entity shall disclose :

1. the nature of the change in accounting policy;
2. the reasons why applying the new accounting policy provides reliable and more relevant information;
3. for the current period and each prior period presented, to the extent practicable, the amount of the adjustment :
   • for each financial statement line item affected; and
   • if IAS 33 applies to the entity, for basic and diluted earnings per share
4. the amount of the adjustment relating to periods before those presented, to the extent practicable; and
5. if retrospective application is impracticable for a particular prior period, or for periods before those presented, the circumstances that led to the existence of that condition and a description of how and from when the change in accounting policy has been applied.

Financial statements of subsequent periods need not repeat these disclosures.

When an entity has not applied a new IFRS that has been issued but is not yet effective, as stated in par. 30, the entity shall disclose :

1. this fact; and
2. known or reasonably estimable information relevant to assessing the possible impact that application of the new IFRS will have on the entity's financial statements in the period of initial application.

Latest, par. 31 states that in complying with par. 30, an entity considers disclosing :

1. the title of the new IFRS;
2. the nature of the impending change or changes in accounting policy;
3. the date by which application of the IFRS is required;
4. the date as at which it plans to apply the IFRS initially; and
5. either :
   • a discussion of the impact that initial application of the IFRS is expected to have on the entity's financial statements; or
   • if that impact is not known or reasonably estimable, a statement to that effect.

(Source : IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors)