Ministry of Finance, Enterprise Accounting Guidelines - Accounting Policies, Changes to Accounting Estimates and Rectification of Accounting Errors (Revised)

Issued: January 18 2001
Effective: January 1 2001
Applicability: For the purposes of these Guidelines, "Accounting policies" means the specific principles followed and the accounting treatment adopted by an enterprise in accounting practice; "Accounting estimates" mean, in respect of transactions or matters whose results are not certain, the judgments on the basis of latest available information; and "Accounting errors" mean the errors of recognition, calculation or recording in accounting practice (Section Three).

Main contents: The Guidelines provide that changes to accounting policies shall comply with the requirements of laws, accounting guidelines and other administrative regulations or provide more reliable and more relevant accounting information (Section Five). If changes are made to provide more reliable and more relevant accounting information, they shall have retrospective effect on the relevant items at the beginning of the current accounting period unless the cumulative effect of such changes cannot be determined (Section Eight). In the case of changes in accounting estimates, the Guidelines do not require determination of their cumulative effect or reformulation of earlier accounting statements (Section 12). Where a change is difficult to identify as a change to accounting policies or a change in accounting estimates, it shall be treated as a change in accounting estimates (Section 13). In the case of accounting errors, the extent of required correction varies depending on whether or not the relevant errors are "Material errors" namely if they affect the reliability of the published accounting statements of the enterprise (Sections 16, 17 and 18).