Changes in accounting policies and estimates
10 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, performance and cash flows. Therefore, the same accounting policies are applied within each period and from one period to the next unless there is a change in accounting policy. WHO will change accounting policy only if it is required by a regulatory or an accounting standards-setting body such as the IPSAS, or if the change results in more relevant or reliable information of transactions, events or conditions in the financial statements.
20 In general, application of changes in accounting policies is done retrospectively. WHO adjusts the opening balance of each affected component of net assets/equity for the earliest period presented and the other comparative amounts disclosed for each prior period presented as if the new accounting policy had always been applied.
30 As a result of the uncertainties inherent in delivering services, measuring assets or other activities, some items in financial statements cannot be measured with precision but can only be estimated. Estimation involves judgments based on the latest available, reliable information. An estimate may need revision if changes occur in the circumstances on which the estimate was based, or as a result of new information or more experience. By its nature, the revision of an estimate does not relate to prior financial periods and is not a correction of an error. The effect of a change in accounting estimates is applied prospectively in the financial period of the change and/or in future financial periods, where applicable.
Prior period errors
40 Errors can arise in respect of the recognition, measurement, presentation or disclosure of elements of financial statements. Financial statements do not comply with IPSAS if they contain either material errors or immaterial errors made intentionally to achieve a particular presentation of an entity's financial position, financial performance or cash flows. Potential current period errors discovered in that period are corrected before the financial statements are authorized for issue. However, material errors are sometimes not discovered until a subsequent period, and these prior period errors are corrected retrospectively in the comparative information presented in the financial statements.
Application of changes
50 Exceptions to retrospective application: When it is impracticable to determine the effects of an error on comparative information, WHO restates the opening balances for the earliest financial period when retrospective restatement is practicable, which may be the current financial period.
60 Application of changes is as follows:
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Changes in accounting policies
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Retrospectively
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Changes in accounting estimates
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Prospectively
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Correction of errors
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Retrospectively
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