Cut the clutter in your accounting policies
For financial years commencing on or after 1 January 2023 only ‘material accounting policy information’ must be disclosed
In brief
- ‘Material accounting policy information’ replaces 'significant accounting policies' aiming to make financial statements easier to read and more relevant to users of the financial statements
- The standards now contain definitions and guidance in determining what ‘material accounting policy information’ is required to be disclosed
- Entities should revisit their accounting policy information to focus on how the entity applies the requirements to its own circumstances providing entity-specific information
Amendments to AASB 101 / NZ IAS 1 Presentation of Financial Statements released in early 2021 are relevant to all Australian entities and New Zealand for-profit entities that apply accounting standards in the preparation of their financial statements.
The key change is ‘significant accounting policies’ is replaced with ‘material accounting policy information’. ‘Significant accounting policies’ was never defined in the accounting standards. Now, the standards contain definitions and guidance on materiality in the context of accounting policies.
Entities with balance dates falling on 31 December 2023 should have already implemented the changes. As June balance dates approach, Kerry Hicks, Director – Technical Standards, Pitcher Partners, recommends reviewing and updating accounting policies now and this article aims to guide you in completing this process.
