Alert: Disclosure of Accounting Policies

Category: IFRS

Alert: Disclosure of Accounting Policies

In August 2019, the International Accounting Standards Board (IASB) published an Exposure Draft (ED) proposing amendments to IAS 1 Presentation of Financial Statements and IFRS 2 Practice Statement 2 Making Materiality Judgements. The proposed amendments are intended to help entities provide accounting policy disclosures that are more useful to primary users of financial statements. The Canadian Accounting Standards Board (AcSB) issued its own ED on this topic in August 2019.

Under IAS 1, entities are required to disclose their ‘significant’ accounting policies. This amendment proposes to replace that requirement with a requirement to disclose ‘material’ accounting policies. Under this proposal, an accounting policy would be material if, when considered together with other information included in an entity’s financial statement, it can reasonably be expected to influence decisions that primary users of general purpose financial statements make on the basis of those financial statements.

In addition, the proposal amends both IAS 1 and IFRS Practice Statement 2 to provide additional guidance to assist entities in applying the concept of materiality in making decisions about accounting policy disclosures. This guidance includes:

  • Clarification that not all accounting policies relating to material transactions, or other events or conditions, are themselves material
  • Circumstances in which an entity is likely to consider an accounting policy to be material to its financial statements.
  • A flow-chart illustrating the determination of whether an accounting policy is material.
  • Illustrative examples, demonstrating the application of materiality judgements with respect to accounting policy disclosures.

The proposed amendment will be applied prospectively on or after the beginning of the first annual reporting period in which the amendment is first applied; an effective date is yet to be decided. Early application will be permitted.

Comments on the ED are requested by the IASB and AcSB by November 29, 2019.

The full history of this IASB project, including related supporting materials, can be accessed here.


This communication contains a general overview of the topic and is current as of September 12, 2019. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2019. All rights reserved.

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Michelle Balmer

Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.