Every now and then it happens that accounting policies that are being used do change – either they are changed by regulatory or you choose to use another approach from opportunities given (i.e. fair value or cost price for investment property etc.).

There is no major drama here really. Just make sure you disclose the fact of the change separately under the heading “Changes in accounting policies used” or something similar in the beginning of the accounting policies section. Things you need to disclose:

• Shortly describing how the item or transaction was measured before.
• Giving the new accounting treatment again shortly.
• Explaining what triggered the change with 1-2 sentences.
• How are financial statements affected? If it’s a retrospective change, the prior year figures need to be adjusted accordingly and you should disclose the initial figures, the effect of the change and the new figures. If the change is prospective as in it does not affect prior year figures, it should be stated with one sentence saying that the change is prospective and prior year figures are unaffected.

And that’s it really. Simply put, just make sure you say clearly what changed and why it changed. Just to give the users an idea of how it affected the statements, it’s useful to also give an idea of the numbers. Something that’s recommended is that if the change is prospective; if possible, also add the numerical affect (i.e. in case cost value was chosen instead of fair value for investment property, there’s going to be depreciation charge in x amount annually on the statements starting from the change).

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