Critical Analysis on the Amendments Discussed, Concerning Changes in Accounting Estimates

Abstract

In this article, our main aim is to bring in discussion some of the most controversial points debated along the time on the use of the accounting estimates in financial reporting. More important, we have referred to the Exposure Draft recently closed for comment letters, which addressed some points that will follow to be transformed into several amendments to IAS 8. Our discussion is focused, especially on how professionals can make a clear distinction between changes in accounting estimates and changes in accounting policies. We try to underline the trinomial perspective of this subject, as the changes in accounting estimates impact, not only the financial statements, but can generate issues on auditing those estimates, or on using financial information output on the entity valuation models. Additionally, we try to emphasize the essential role of this distinction between changes in accounting estimates and changes in accounting policies.

O efeito dos ajustes de exercícios anteriores no patrimônio líquido e no ROE de companhias listadas no Novo Mercado da B3

“…A mudança na estimativa contábil é abordada no CPC 23 como "ajuste nos saldos contábeis de ativo ou de passivo, ou nos montantes relativos ao consumo periódico de ativo, que decorre da avaliação da situação atual e das obrigações e dos benefícios futuros esperados associados aos ativos e passivos" (CPC, 2009, p. 2). Burca et al (2019) mencionam que, após uma simples pesquisa nas IAS e IFRS, foi possível encontrar mais de 150 casos referentes a estimativas contábeis, pois a razoável incerteza, aceita na preparação das demonstrações financeiras, permite que os preparadores usem as estimativas. Consoante ao CPC 23, podem ser exigidas estimativas de: créditos de liquidação duvidosa, obsolescência de estoques, vida útil de ativos depreciáveis, valor justo de ativos e passivos financeiros etc.…”

The effect of prior period adjustments on equity and ROE of companies listed on B3's New Market

“…The change in accounting estimate is addressed in CPC 23 as "adjustments to the accounting balances of assets or liabilities, or the amounts related to the periodic consumption of assets, resulting from the evaluation of the current situation and the expected future obligations and benefits associated with assets and liabilities" (CPC, 2009, p. 2). Burca et al (2019) mention that, after a simple search in IAS and IFRS, more than 150 cases related to accounting estimates were found, as the reasonable uncertainty accepted in the preparation of financial statements allows preparers to use estimates. According to CPC 23, estimates may be required for doubtful settlement credits, obsolescence of inventories, useful life of depreciable assets, fair value of financial assets and liabilities, etc.…”

“…Ruberto and Alves (2015) analyzed the qualitative characteristics of informational disclosure in the explanatory notes of major Brazilian companies regarding accounting policies, changes in estimates, and error corrections. Burca, Nicolaescu, and Dragut (2019) discussed the most controversial points of IAS 8, such as the distinction between changes in accounting policies and changes in accounting estimates.…”

Changes in Accounting Estimates for Disclosure Discrepancy in The Useful Life of Pot Reduction: Study Case in PT. XYZ (Persero) Indonesia

“…This statement is in line with Efeelo and Anichebe (2021), and Clarkson (1995) in their research which also argues that the relevance of applying stakeholder theory with the application of changes in accounting estimates is that entities must pay attention to the needs of their stakeholders, including the credibility or information content contained in the company's financial statements that can have a negative impact or vice versa, in terms of corporate decision making. Valentin, Cristina, and Daniel (2019) also state the importance of higher financial transparency that must be carried out by Managers, especially in the area of increasing financial disclosure, which aims to present a clearer picture to users of financial statements (stakeholder) about the reasons used in the accounting and reporting process.…”