PAS 8: ACCOUNTING POLICIES,

CHANGES IN ACCOUNTING
ESTIMATES AND ERRORS
 CONTENT

• Objective and Scope

• Accounting Policies
• Hierarchy of Reporting Standards
• Changes in Accounting Policies and Changes in Accounting
Estimate
• Errors
 OBJECTIVE AND SCOPE
• PAS 8 prescribes the criteria for selecting, applying, and changing
accounting policies and the accounting and disclosure of changes in
accounting policies, changes in accounting estimates and correction of
prior period errors
• For all IAS 8 issues
 ACCOUNTING POLICIES

• the specific principles, bases, conventions, rules and

practices applied by an entity in preparing and
presenting financial statements
 HIERARCHY OF REPORTING STANDARDS

Philippine Financial Reporting Standards (PFRSs) are Standards and Interpretations

adopted by the Financial Reporting Standards Council (FRSC). They comprise the
following:
1. Philippine Financial Reporting Standards (PFRSs);
2. Philippine Accounting Standards (PASS); and
3. Interpretations
 HIERARCHY OF REPORTING STANDARDS

Judgment
• Management shall consider the following:
a. Requirements in other PFRSs dealing with similar transactions
b. Conceptual Framework
• Management may consider the following:
a. Pronouncements issued by other standard-setting bodies
b. Other accounting literature and industry practices
Scope of PAS 8
Description
Change in Change in
Accounting Policy measurement basis
Change in Accounting Changes in the realization (or
Estimate incurrence) of expected
inflow (or outflow) of
Economic benefits
from assets (or liabilities)
Correction of prior period Misapplication of
error principles, oversight or
misinterpretation of facts and
mathematical mistakes
Accounting
Treatment
a. Transitional provision
b. Retrospective application
c. if (b) is impracticable,
prospective application
Prospective application
a. Retrospective restatement
b. If (b) is impracticable,
prospective application.
Effect of
Adjustment
On the
Beginning balance
of retained earning, if
accounted for retrospectively.
In profit or loss
of current period or current
and future periods, if the
change affects both.
On the
Beginning balance
of retained earning , if
accounted for retrospectively.
• When it is difficult to distinguish a change in accounting policy
from a change in accounting estimate, the change is treated as a
change in an accounting estimate
• A voluntary change in accounting policy is accounted for by
retrospective application. Early application of a PFRS is not a
voluntary change in accounting policy
 EXAMPLES OF CHANGES IN ACCOUNTING
POLICY
• Change from the FIFO cost formula for inventories to the
Average cost formula.
• Change in the method of recognizing revenue from long-term
construction contracts.
• Change to a new policy resulting from the requirement of a
new PFRS.
 EXAMPLES OF CHANGES IN ACCOUNTING
ESTIMATE
• Change in depreciation or amortization methods
• Change in estimated useful lives of depreciable assets
• Change in estimated residual values of depreciable assets
• Change in required allowances for impairment losses and
uncollectible accounts
 ERRORS

• Errors include the effects of:

Mathematical mistakes
Mistakes in applying accounting policies
Oversights or misinterpretations of facts; and
Fraud
THANK YOU FOR
LISTENING

REPORTED BY:
Celones, Akira Ken
Tindoy, Leonel
 REFERENCES

• Updated PAS-8-ACCTG-Policies-Changes-in-ACCTG-Estimates-Errors.pptx. (2023,

September 22). [Slide show]. SlideShare.
https://www.slideshare.net/JeanethDCarnicer/updated-pas8acctgpolicieschangesinacct
gestimateserrorspptx
• Bautista, F. (n.d.-b). PAS 8. Scribd.https
://www.scribd.com/document/508281550/PAS-8
• IAS 8 — Accounting policies, changes in accounting estimates and errors. (n.d.).
https://www.iasplus.com/en/standards/ias/ias8