The most important changes in IFRS and IAS in 2023

The aim is to aid with decision as to which accounting policies to disclose in financial standards in order to provide more useful information to the users of financial standards.

Companies are required to disclose information regarding the material accounting policies as opposed to the significant accounting policies. Additionally, guidance has been provided on applying the concept of materiality when deciding on accounting policy disclosures (IFRS Practice Statement 2 includes specific examples).

A new definition on accounting estimates was introduced, where accounting estimates are “monetary amounts in FS that are subject to measurement uncertainty “. A change in accounting estimate resulting from new information/developments is not classed as the correction of an error. The effects of a change in an input/measurement technique are changes in accounting estimates if they do not result from the correction of prior period errors.

Changes in accounting estimates are applied prospectively only to current or future transactions and other future events.

Amendments include an additional condition where the exemption for the initial recognition does not apply. A temporary difference arising on initial recognition of an asset/liability is not subject to initial exemption if the transaction gave rise to equal taxable and deductible temporary differences.

Companies with significant balances of right-of-use assets, lease liabilities, decommissioning liabilities, etc. are highly affected as the additional deferred tax will have to recognised in financial standards.

The new standard replaces IFRS 4.

It applies to all types of insurance contracts regardless of what type of company issues them.

The aim is to help companies with the implementation of the standard. It should increase transparency and reduce diversity in the accounting.