Proposed amendments to disclosure of accounting policies
FINANCIAL REPORTING INSIGHTS |
International Accounting Standard (IAS) 1, Presentation of Financial Statements, requires companies to disclose their “significant” accounting policies. To clarify the threshold for disclosure, the International Accounting Standards Board recently proposed replacing the reference to “significant” with a requirement to disclose “material” accounting policies. The proposal states that information about an accounting policy is material if, when considered together with other information included in a company’s financial statements, it can influence financial statement users’ decisions about the company.
The Board also proposes (a) additional guidance to IAS 1 to help companies understand what makes an accounting policy material and (b) updates to International Financial Reporting Standard Practice Statement 2, Making Materiality Judgements, which add further explanations and examples to help companies apply the concept of materiality in making decisions about accounting policy disclosures.
The Exposure Draft, Disclosure of Accounting Policies, is available for comment until November 29, 2019.