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Wiley IFRS: Practical Implementation Guide and Workbook
Interpretation and considering the relevant Implementation Guidance issued by the IASB for the
Standa rd or Interpretation.
4.2 If the extant IASB Standards or Interpretations do not address a specific transaction, other
event, or condition, management shall develop and apply a policy that is relevant to decision–
making needs of users of financial statements and is reliable as well. In this context, "reliable"
means to
• Represent faithfully the financial position, financial performance and cash flows
• Reflect the economic substance of transactions, other events, and conditions
• Be neutral
• Be prudent
• Be complete in all material respects
4.3 In making these judgments, the management of an entity should apply the following sources
in
descending order:
• The requ irements and guidance in Standards and Interpretations dealing with similar and re–
lated issues
• The defin itions, recognition criteria, and measurement concepts for assets, liabilities, income,
and expenses as outlined in the IASB' s
Framework
4.4 Furthermore, in making the judgment, the management of an entity may also consider the
most recent pronouncements of other standard-setting bodies that use a similar conceptual frame–
work to develop standards, other accounting literature, and accepted industry practices, to the ex–
tent that these do not conflict with the sources of primary reference (i.e., the IASB Standards and
Interp retations and its
Framework).
Practical Insight
According to lAS 8, when an entity's management is faced with a situation of interpretation of
the IASB Standards on a matter that is not expressly covered by the existing IASB Standards
or Interpretations, then it should look at the IASB' s
Framework
for answers. While doing so it
should also research recent pronouncements of other standard-setters to the extent that these
do not conflict with the IASB Standards or Interpretations or its
Framework.
For example, compare Standards issued to date by the IASB to U.S. generally accepted ac–
counting principles (GAAP), which addresses not only genera l accounting standards but is
replete with industry-specific rules and guidance. US GAAP contains accounting pro–
nouncements and guidelines for industries ranging from oil and gas to real estate; the IASB
Standards are geared toward general accounting standards and not so much industry-specific
guidance, although some of the recently promulgated IASB Standards seek to address industry
specific standards as well. To date, the only industries that are covered by the IASB Standards
are insurance, banking, and the extractive industry. Thus, according to lAS 8, if an entity's
management is seeking answers to accounting matters or issues relating to a specific industry
that the IASB Standards have not yet addressed, then guidance under US GAAP (or other
national standard that provide such guidance) may be consulted, keeping in mind that the
guidance to be applied must not conflict with the primary source of reference (i.e., the IASB
Standards and Interpretations or the IASB' s
Framework).
5. CONSISTENCY OF ACCOUNTING POLICIES
5.1 Once selected, accounting policies must be applied consistently for similar transactions, other
events, and conditions unless a Standard or Interpretation specifica lly otherwise requires or permits
categorization of items for which different policies may be appropriate.
5.2 If a Standard or Interpretation requ ires or permits such categorization, an appropriate
accounti ng policy shall be selected and applied consistently to each category.