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Commission Regulation
(EC) No 2238/2004 of 29 December 2004 amending
Regulation (EC) No 1725/2003 adopting certain
international accounting standards in accordance with
Regulation (EC) No 1606/2002 of the European Parliament
and of the Council, as regards IASs IFRS 1, IASs Nos 1
to 10, 12 to 17, 19 to 24, 27 to 38, 40 and 41 and SIC
Nos 1 to 7, 11 to 14, 18 to 27 and 30 to 33
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Accounting Policies
Selection and
Application of Accounting Policies
7. When a Standard
or an Interpretation specifically applies to a transaction,
other event or condition, the accounting policy or policies
applied to that item shall be determined by applying the
Standard or Interpretation and considering any relevant
Implementation Guidance issued by the IASB for the
Standard or Interpretation.
8. IFRSs set out
accounting policies that the IASB has concluded result in
financial statements containing relevant and reliable
information about the transactions, other events and
conditions to which they apply. Those policies need not be
applied when the effect of applying them is immaterial.
However, it is inappropriate to make, or leave uncorrected,
immaterial departures from IFRSs to achieve a particular
presentation of an entity’s financial position, financial
performance or cash flows.
9. Implementation
Guidance for Standards issued by the IASB does not form part
of those Standards, and therefore does not contain
requirements for financial statements.
10. In the absence
of a Standard or an Interpretation that specifically applies
to a transaction, other event or condition, management shall
use its judgement in developing and applying an
accounting policy that results in information
that is:
(a) relevant to the
economic decision-making needs of users; and
(b) reliable, in
that the financial statements:
(i) represent
faithfully the financial position, financial performance
and cash flows of the entity;
(ii) reflect the
economic substance of transactions, other events
and conditions, and not merely the legal form;
(iii) are neutral,
ie free from bias;
(iv) are prudent;
and
(v) are complete in
all material respects.
11. In making the
judgement described in paragraph 10, management shall
refer to, and consider the applicability of, the following
sources in descending order:
(a) the requirements
and guidance in Standards and Interpretations
dealing with similar and related issues; and
(b) the definitions,
recognition criteria and measurement concepts
for assets, liabilities, income and expenses in the Framework.
12. In making the
judgement described in paragraph 10, management may
also consider the most recent pronouncements of other standard-setting
bodies that use a similar conceptual framework to develop
accounting standards, other accounting literature and accepted
industry practices, to the extent that these do not conflict
with the sources in paragraph 11.
Consistency of
Accounting Policies
13. An entity shall
select and apply its accounting policies consistently for
similar transactions, other events and conditions, unless a
Standard or an Interpretation specifically requires or
permits categorisation of items for which
different policies may be appropriate. If a
Standard or an Interpretation requires or permits such
categorisation, an appropriate accounting policy shall be
selected and applied consistently to each category.
Changes in
Accounting Policies
14. An entity shall
change an accounting policy only if the change:
(a) is required by a
Standard or an Interpretation; or
(b) results in the
financial statements providing reliable and more
relevant information about the effects of transactions,
other events or conditions on the entity’s financial
position, financial performance or cash flows.
15. Users of
financial statements need to be able to compare the financial
statements of an entity over time to identify trends in its
financial position, financial performance and cash flows.
Therefore, the same accounting policies are applied within
each period and from one period to the next unless a change in
accounting policy meets one of the criteria in paragraph 14.
16. The following
are not changes in accounting policies:
(a) the application
of an accounting policy for transactions, other
events or conditions that differ in substance from those
previously occurring; and
(b) the application
of a new accounting policy for transactions, other
events or conditions that did not occur previously or
were
immaterial.
17. The initial
application of a policy to revalue assets in accordance
with IAS 16 Property, Plant and Equipment or IAS
38 Intangible Assets is a change in an
accounting policy to be dealt with as a revaluation
in accordance with IAS 16 or IAS 38, rather than in accordance
with this Standard.
18. Paragraphs 19-31
do not apply to the change in accounting policy described in
paragraph 17.
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