IAS 8 Has a New Name: Here’s What It Means
Why IAS 8 Is Now Called Basis of Preparation of Financial Statements
The IASB has retitled IAS 8 Basis of Preparation of Financial Statements. The amended Standard applies when an entity adopts IFRS 18. Adoption is mandatory for annual reporting periods beginning on or after 1 January 2027, unless IFRS 18 is applied earlier. The familiar rules on accounting policies, estimates and errors are not disappearing.
For more than two decades, accountants have known IAS 8 by the descriptive title Accounting Policies, Changes in Accounting Estimates and Errors. That title neatly captured its core subject matter. But the International Accounting Standards Board (IASB) has now broadened the Standard’s contents and retitled it IAS 8 Basis of Preparation of Financial Statements.
The change is a consequence of IFRS 18 Presentation and Disclosure in Financial Statements, issued on 9 April 2024. IFRS 18 replaces IAS 1 Presentation of Financial Statements. In reorganising IAS 1, the IASB kept some requirements in IFRS 18 and moved other requirements, with only limited wording changes, to IAS 8 or IFRS 7 Financial Instruments: Disclosures.
The most important point is also the easiest to miss: IAS 8 has not been replaced, and its existing accounting-policy, estimate and error requirements remain. Its new title reflects a wider remit, not the abandonment of its old one.
- Pre-IFRS 18 title
- IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
- Retitled Standard
- IAS 8 Basis of Preparation of Financial Statements
- Why it changes
- IFRS 18 replaces IAS 1 and moves several basis-of-preparation requirements from IAS 1 into IAS 8.
- What moves in
- Fair presentation and IFRS compliance; going concern; accrual accounting; material accounting policy information; significant judgements in applying accounting policies; and sources of estimation uncertainty.
- What stays
- The rules for selecting and changing accounting policies, changing accounting estimates and correcting prior-period errors.
- Mandatory application
- The amended IAS 8 applies with IFRS 18 for annual reporting periods beginning on or after 1 January 2027.
- Early application
- Permitted with IFRS 18. An entity applying IFRS 18 early discloses that fact and applies the related consequential amendments.
- Practical message
- Prepare for a change in references, manuals, templates and disclosures, while preserving the familiar retrospective-versus-prospective analysis.
Why the old title no longer fits
IFRS 18 is the key to the story. It replaces IAS 1 and becomes the main Standard governing the presentation and disclosure of information in general purpose financial statements. The IASB did not, however, simply copy the whole of IAS 1 into IFRS 18. It reorganised the requirements according to where they fit best.
Requirements concerned directly with the structure and content of financial statements sit in IFRS 18. Some financial-instrument disclosure material moved to IFRS 7. Requirements that describe the underlying basis on which financial statements are prepared moved to IAS 8.
Once those foundational requirements were added, the old title became too narrow. A Standard covering fair presentation, compliance with IFRS Accounting Standards, going concern and accrual accounting is about more than policies, estimates and errors. Basis of Preparation of Financial Statements therefore describes the amended content more faithfully.
The title changes because IAS 8’s scope becomes wider, not because accounting policies, estimates and errors leave the Standard.
A brief history of the title
IAS 8 has changed names before. Its predecessors dealt with unusual and prior-period items, then net profit or loss, fundamental errors and accounting policies. In December 2003, the IASB issued the title familiar today. The title Basis of Preparation of Financial Statements was introduced with IFRS 18 in April 2024; mandatory application begins with annual periods starting on or after 1 January 2027.
What moves from IAS 1 to IAS 8
The IASB’s overview highlights four broad concepts moved into IAS 8: fair presentation and IFRS compliance, going concern, accrual accounting, and disclosures about the selection and application of accounting policies. The IASB’s detailed concordance shows that the disclosure material includes three distinct areas: material accounting policy information, significant judgements and sources of estimation uncertainty.
| Requirement | What it means in practice |
|---|---|
| Fair presentation and compliance with IFRS | Financial statements must present fairly the entity’s financial position, financial performance and cash flows. An entity makes an explicit and unreserved statement of compliance only when it complies with all applicable IFRS Accounting Standards. The requirements also address the extremely rare circumstances in which management concludes that compliance with a requirement would be so misleading that it would conflict with the objective of financial statements. |
| Going concern | Management assesses whether the entity can continue as a going concern when preparing financial statements. It considers all available information about the future, looking at least 12 months from the end of the reporting period, and discloses material uncertainties that may cast significant doubt on the entity’s ability to continue. The IFRS Foundation describes these requirements as moved unchanged from IAS 1. |
| Accrual basis of accounting | Except for cash-flow information, an entity prepares its financial statements using the accrual basis. Items are recognised as assets, liabilities, equity, income and expenses when they satisfy the applicable definitions and recognition criteria, rather than simply when cash is received or paid. |
| Material accounting policy information | IAS 8 becomes the location for the requirement to disclose material accounting policy information. Accounting policy information is material when, considered together with other information in the financial statements, it could reasonably be expected to influence decisions made by primary users. This sits naturally beside IAS 8’s existing rules for choosing and changing policies. |
| Significant judgements in applying accounting policies | An entity discloses the judgements, apart from those involving estimations, that management has made when applying accounting policies and that have the most significant effect on the amounts recognised in the financial statements. |
| Sources of estimation uncertainty | An entity discloses information about assumptions concerning the future and other major sources of estimation uncertainty at the reporting date when there is a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The disclosure includes the nature and carrying amount of those assets and liabilities. |
Relocation, not wholesale reinvention
The detailed paragraph map is: IAS 1.15–24 to IAS 8.6A–6J; IAS 1.25–26 to IAS 8.6K–6L; IAS 1.27–28 to IAS 8.6M–6N; IAS 1.117–117E and 122–124 to IAS 8.27A–27I; and IAS 1.125–133 to IAS 8.31A–31I. The IASB’s project summary says requirements moved to IAS 8 or IFRS 7 with only limited wording changes.
What remains in IAS 8
The long-standing core of IAS 8 remains intact. The retitled Standard continues to govern how an entity selects and applies accounting policies, accounts for a voluntary or required change in policy, updates an accounting estimate and corrects a material prior-period error.
- Selecting accounting policies. Apply the IFRS Standard or Interpretation that specifically addresses the transaction, event or condition. If none applies directly, management uses judgement to develop a policy that produces relevant and reliable information, following IAS 8’s hierarchy of guidance.
- Applying policies consistently. Use the selected policy consistently for similar transactions, other events and conditions unless an IFRS requirement specifically permits or requires categorisation with different policies.
- Changing accounting policies. Change a policy only when an IFRS requirement requires it or when the change produces financial statements with reliable and more relevant information. Apply the change retrospectively unless specific transition provisions apply or retrospective application is impracticable.
- Changing accounting estimates. Recognise the effect prospectively in the period of change, or in the period of change and future periods when both are affected.
- Correcting prior-period errors. Correct material errors retrospectively by restating comparative amounts, unless determining the period-specific or cumulative effects is impracticable.
Do not read too much into the shorter title
The words “accounting policies, changes in accounting estimates and errors” disappear from the title, but not from the requirements. They remain central to IAS 8 and to day-to-day financial reporting.
Policy, estimate or error?
The classification still matters because it determines whether an entity looks backwards or forwards. A policy change is generally applied to prior periods; an estimate change updates the present and future; and a material error generally corrects prior-period information.
| Category | What it is | Usual accounting treatment | Typical examples |
|---|---|---|---|
| Accounting policy | The specific principles, bases, conventions, rules and practices used in preparing and presenting financial statements. | Retrospective application, unless the relevant IFRS transition provisions say otherwise or retrospective application is impracticable. | A change in the measurement basis applied. Changing an inventory cost formula, for example from FIFO to weighted average, is also a change in accounting policy when the criteria for changing policies are met. |
| Accounting estimate | A monetary amount in the financial statements that is subject to measurement uncertainty. | Prospective recognition in profit or loss in the period of change, or in that period and future periods, as applicable. An estimate change affecting an asset, liability or equity item adjusts that item in the period of change. | Revising an asset’s useful life or residual value, a provision, expected credit losses or an input used in a fair-value estimate because of new information. |
| Prior-period error | An omission from, or misstatement in, prior-period financial statements caused by failing to use, or misusing, reliable information that was available and could reasonably have been obtained when those statements were authorised for issue. | Retrospective restatement of comparative amounts, unless it is impracticable to determine the period-specific or cumulative effects. | A mathematical mistake, an incorrect application of a policy, an oversight of information already available or the effects of fraud. |
A simple decision sequence
Ask whether the underlying principle or basis changed
If the entity has changed the principle, basis, convention, rule or practice used to account for an item, the change may be an accounting-policy change.
Ask whether new information changed a measurement
If the policy is unchanged but updated information, experience or circumstances alter a monetary amount subject to measurement uncertainty, the change is generally an estimate change.
Ask what information was available before
If reliable information already existed and could reasonably have been obtained when the earlier financial statements were authorised, failing to use it correctly may be a prior-period error.
The dividing line
A change in an accounting estimate arising from new information or new developments is not the correction of an error. Where it is difficult to distinguish an accounting-policy change from an estimate change, IAS 8 treats the change as an estimate change.
How IAS 1, IFRS 18 and IAS 8 fit together
The reorganisation is easier to understand as a change of address. IAS 1 is replaced; its requirements are either replaced, carried into IFRS 18, or moved to another Standard.
| Standard | Role after IFRS 18 becomes effective |
|---|---|
| IAS 1 Presentation of Financial Statements | Replaced by IFRS 18. It ceases to be the principal presentation Standard once IFRS 18 is applied. |
| IFRS 18 Presentation and Disclosure in Financial Statements | Sets overall presentation and disclosure requirements. Its major new features include defined profit-or-loss subtotals, management-defined performance measures and enhanced aggregation and disaggregation principles. |
| IAS 8 Basis of Preparation of Financial Statements | Houses the foundational preparation concepts and disclosures moved from IAS 1, together with the existing requirements for accounting policies, estimates and errors. |
| IFRS 7 Financial Instruments: Disclosures | Receives the IAS 1 disclosure requirements relating to puttable financial instruments, and instruments with obligations arising on liquidation, that are classified as equity. |
The result is a clearer division of labour: IFRS 18 focuses on how information is presented and disclosed, while IAS 8 explains important bases used to prepare the financial statements and how to deal with policies, estimates and errors.
Effective date and transition
The IASB retitled IAS 8 when it issued IFRS 18 in April 2024. For reporting purposes, the consequential amendments, including IAS 8’s expanded content, apply when an entity applies IFRS 18. IFRS 18 is mandatory for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. An entity applying IFRS 18 early discloses that fact in the notes.
IFRS 18 is applied retrospectively under IAS 8, so comparative information is restated using IFRS 18. In the first annual financial statements applying IFRS 18, an entity also discloses, for every line item in the statement of profit or loss for the immediately preceding comparative period, a reconciliation between the restated amount under IFRS 18 and the amount previously presented under IAS 1. IFRS 18 specifically exempts an entity from providing the quantitative information otherwise required by IAS 8.28(f).
Interim reporting is also affected in the first year. An entity applying IAS 34 presents in its condensed interim financial statements each heading it expects to use under IFRS 18 and the subtotals required by IFRS 18.69–74. It also provides line-item reconciliations for the comparative interim and comparative year-to-date periods immediately preceding the current interim and current year-to-date periods.
What the date means
For a calendar-year entity that does not early-apply, IFRS 18 and the amended IAS 8 first apply to the year ending 31 December 2027. Because 2026 is the immediately preceding comparative period, entities need enough 2026 information to restate that comparison under IFRS 18. Implementation therefore belongs on the 2026 agenda, not the 2027 year-end checklist.
The relocation and renaming of IAS 8 do not, by themselves, create a new measurement basis or automatically change reported amounts. The more substantial transition work arises from IFRS 18’s presentation and disclosure requirements, while IAS 8’s new title and structure affect references, documentation and where preparers look for the relevant guidance.
What changes in practice
The change may look editorial, but it reaches the documents and processes built around the Standards. Preparers, auditors, lecturers and students should expect old IAS 1 and IAS 8 references to persist for a while, especially in templates and training material produced before IFRS 18.
- Financial-statement templates. Update note headings and cross-references, including references dealing with the basis of preparation, IFRS compliance, going concern, material accounting policy information, significant judgements and estimation uncertainty.
- Accounting manuals. Replace superseded IAS 1 references and use the amended IAS 8 locations for the requirements that moved.
- Disclosure checklists. Re-map controls and checklist questions to IFRS 18, IAS 8 and IFRS 7 so that no requirement is lost during the changeover.
- Going-concern governance. Preserve the existing assessment and disclosure discipline even though the requirements have a new home.
- Training and examinations. Teach both the new title and the continuing three-way distinction between policies, estimates and errors. Older source material may use the former title for periods before IFRS 18 is applied.
- Contracts and regulation. Review policies, loan documentation and regulatory material that refer specifically to IAS 1 or to IAS 8 by its former title.
- Digital reporting. Check taxonomy mappings and note labels. The IFRS Accounting Taxonomy has been updated to reflect the renamed Standard and the relocated statement-of-compliance disclosures.
The safest approach is to treat the IAS 8 change as one workstream within the wider IFRS 18 implementation project. That avoids updating references twice and keeps the basis-of-preparation note aligned with the new primary-financial-statement presentation.
A practical preparation plan
Set the application date
Confirm whether the entity will apply IFRS 18 from its mandatory date or earlier. Work backwards from that decision to identify the comparative information required.
Build a requirements map
Map existing IAS 1 references to IFRS 18, amended IAS 8 or IFRS 7. Focus first on policies, disclosures and controls used in the annual report.
Refresh the basis-of-preparation disclosures
Review IFRS compliance, going concern and accrual accounting, together with material accounting policy information, significant judgements and sources of estimation uncertainty.
Protect the policy-estimate-error analysis
Retain documented procedures that distinguish the three categories and support the resulting retrospective or prospective treatment.
Test a 2026 comparative close
For a calendar-year mandatory adopter, capture the data needed to restate 2026 comparatives and prepare IFRS 18’s required reconciliations before the 2027 reporting deadline.
Conclusion
IAS 8 is losing a familiar title because it is gaining a broader role. When IFRS 18 replaces IAS 1, the principles of fair presentation and IFRS compliance, going concern and accrual accounting move into IAS 8, together with disclosures about material accounting policy information, significant judgements and sources of estimation uncertainty. Basis of Preparation of Financial Statements is therefore a more accurate description of what the amended Standard contains.
But the substance accountants have relied on remains. Policies are still selected and changed under IAS 8; estimates are still updated prospectively; and material prior-period errors are still corrected retrospectively, subject to the impracticability exception. The right response is not to forget the old IAS 8, but to understand its expanded architecture and update reporting systems before 2027.
Key points to remember
- New name, same Standard number. IAS 8 becomes Basis of Preparation of Financial Statements.
- IFRS 18 causes the change. IFRS 18 replaces IAS 1 and reorganises its requirements.
- IAS 8 gains wider preparation and disclosure content. It receives fair presentation and compliance, going concern, accrual accounting, material accounting policy information, significant judgements and estimation-uncertainty disclosures from IAS 1.
- The old core remains. Accounting policies, changes in accounting estimates and errors stay within IAS 8.
- Treatment still depends on classification. Policy changes are generally retrospective; estimate changes are prospective; material prior-period errors are generally restated retrospectively.
- Mandatory from 2027. IFRS 18 applies for annual periods beginning on or after 1 January 2027, with earlier application permitted.
- Comparatives matter. Calendar-year entities applying in 2027 need IFRS 18-ready comparative information for 2026.
Frequently asked questions
What is the new name of IAS 8?
The new title is IAS 8 Basis of Preparation of Financial Statements.
Why is IAS 8 changing its name?
IFRS 18 replaces IAS 1 and moves several foundational preparation requirements into IAS 8: fair presentation and IFRS compliance, going concern, accrual accounting, material accounting policy information, significant judgements and sources of estimation uncertainty. The wider title better reflects that expanded content.
When does the amended IAS 8 apply?
The IASB retitled IAS 8 when it issued IFRS 18 in April 2024. The consequential amendments apply when an entity applies IFRS 18: mandatorily for annual reporting periods beginning on or after 1 January 2027, or earlier if the entity early-applies IFRS 18.
Has IAS 8 been replaced?
No. IAS 8 remains IAS 8. It is retitled and expanded. IFRS 18 replaces IAS 1, not IAS 8.
Do accounting policies, estimates and errors leave IAS 8?
No. The requirements remain in IAS 8 even though those words are no longer in its title.
What is the main difference between an accounting policy and an accounting estimate?
An accounting policy is a principle, basis, convention, rule or practice used to prepare and present financial statements. An accounting estimate is a monetary amount subject to measurement uncertainty. Policy changes are generally retrospective, while estimate changes are recognised prospectively.
Is a revised estimate a prior-period error?
Not when the revision results from new information, new developments or more experience. It becomes an error question when reliable information was available and could reasonably have been obtained when the earlier financial statements were authorised, but was omitted or misused.
Does the IAS 8 name change alter reported numbers?
Not by itself. The title change and relocation of requirements do not create a new measurement basis. Entities should separately assess the effects of IFRS 18’s new presentation and disclosure requirements.
Can an entity apply the changes early?
Yes. IFRS 18 permits earlier application. An entity that applies it early discloses that fact and applies the related consequential amendments, including the amended IAS 8.
What should preparers do now?
Set the implementation date, map IAS 1 references to their new locations, update manuals and financial-statement templates, refresh the basis-of-preparation disclosures, train staff and prepare the comparative and reconciliation information needed for retrospective application of IFRS 18.
Key terms
- IAS 8
- Basis of Preparation of Financial Statements. The amended Standard covers foundational preparation and disclosure requirements as well as accounting policies, estimates and errors.
- IFRS 18
- Presentation and Disclosure in Financial Statements. The Standard replacing IAS 1 for annual periods beginning on or after 1 January 2027.
- Fair presentation
- Faithful representation of the effects of transactions, other events and conditions in accordance with the applicable recognition, measurement, presentation and disclosure requirements.
- Going concern
- The basis of preparation used unless management intends to liquidate the entity or cease trading, or has no realistic alternative but to do so.
- Accrual basis
- Accounting that recognises the effects of transactions and events when the relevant recognition criteria are met, rather than only when cash moves.
- Retrospective application
- Applying a new accounting policy as if it had always been applied.
- Prospective recognition
- Recognising the effect of an estimate change in the current period and, where applicable, future periods affected by the change.
- Prior-period error
- An omission or misstatement caused by failing to use, or misusing, reliable information that was available and could reasonably have been obtained when earlier financial statements were authorised.
Based on IAS 8 Basis of Preparation of Financial Statements, IFRS 18 Presentation and Disclosure in Financial Statements, the IASB’s IFRS 18 Project Summary and official concordance and comparison, the IFRS Foundation’s going-concern educational material, and the IFRS 18 Taxonomy Update. This explainer is for educational purposes and is not a substitute for the full Standards or professional advice.
