Accounting policy is an internal document that contains data to ensure effective accounting, preparation and presentation of financial information, which is developed to combine with management decisions.
The use of accounting policies should be consistently for similar transactions, other events or conditions. An entity has the right to change accounting policies only with the documentation of changes and their foundation. Cases in which it is possible to change the use to the accounting policies can be voluntary and mandatory.
Accountants should use the theoretical and methodological aspects set out in UAS 6 “Error Correction and Changes in Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” to reflect properly changes in the accounting policies. Due to detailed analysis of these standards, IAS 8 was found to consist all needed methodology of accounting policy changes.
The international standard gives variable instructions on: financial statements data change due to the event of factors that exist on this balance sheet; information to be covered in the notes (disclosure) to financial statements; accounting estimate changes, etc.
International and national standards disclose changes and amendments to the accounting policies. This fact is very important for the users of the accounting policies and financial statements, as the amendment does not provide any financial statements data change.
The company should clearly understand the difference between changes in the accounting policies and accounting estimates, know due to what circumstances retrospective application of changes in the accounting policies is impossible and how reflect them properly in a prospective way. To ease understanding of the described processes an algorithm for using changes in accounting policies according to international and national standards was developed. This will improve the quality of information presented in the financial statements of the company and as a result of using these data top management will make effective decisions.
THEORETICAL AND METHODOLOGICAL ASPECTS OF CHANGES IN ACCOUNTING POLICY ACCORDING TO INTERNATIONAL AND NATIONAL STANDARDS
