08/01/2018 - EFRAG's Comment Letter and Feedback Statement on the IASB's Exposure Draft ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8)

​On 12 September 2017, the IASB published Exposure Draft ED/2017/5 Accounting Policies and Accounting Estimates (Proposed amendments to IAS 8) which proposes to:

• Clarify the definitions of accounting policies and provide a definition of accounting estimates with the objective of making them more concise and distinctive;
• Clarify how accounting policies and estimates relate to each other;
• Clarify that changes in valuation techniques and changes in estimation techniques are changes in accounting estimates; and
• Clarify that a change in the cost formulas of IAS 2 Inventories in determining the cost of interchangeable inventories is a change in accounting policy.

In its comment letter, EFRAG:

• Supports the IASB's initiative to clarify the definition of accounting policies and to provide a definition of accounting estimates but considers that the proposals may not deliver sufficient clarification unless supported by additional illustrative examples;
• Agrees with the proposed clarification that changes in valuation techniques and changes in estimation techniques are changes in accounting estimates; and
• Acknowledges the need to address the diversity in practice regarding changes in the cost formulas of interchangeable inventories but recommends that the proposed guidance is placed in IAS 2 Inventories to avoid any application by analogy to other circumstances.

Lastly, EFRAG recommends that the proposed Amendments are delayed and then grouped with other amendments to IAS 8 tentatively approved by the IASB on accounting policy changes; to avoid repeated changes to the Standard in a very short period of time.

The feedback statement describes the main comments received by EFRAG in response to its draft comment letter and how these comments were considered by EFRAG in finalising its comment letter to the IASB.

The Comment letter is available here and the feedback statement is available here.