There is an underlying presumption that an accounting principle, once adopted, should not be changed for similar events and transactions. A change in principle may be caused by new events, changing conditions, or additional information or experience.
There are two circumstances when a company is required to change an accounting policy. These are:
- If the change is required by a Standard or an Interpretation; or
- If the change results in the financial statements providing more reliable and relevant information about the effects of transactions (or other events).
IAS 8 19 (b) requires retrospective application (i.e., the application of a different accounting method to previous years as if that new method had always been used) to prior years’ financial statements of … Read more