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Get your accounting policies in order
Technical article

Get your accounting policies in order

For the first time for December 2023 balance dates, we should start to see financial statements becoming more streamlined and contain more useful accounting policy information.

The latest changes which require the disclosure of material accounting policy information should result in the pages and pages of boilerplate standardised accounting policies being replaced with only material accounting policy information that focuses on how the entity has applied the requirements of accounting standards to its own circumstances.

For June balance dates, this amendment in accounting standards will first be applicable to June 2024 financial statements.

The new requirements, introduced for annual reporting periods commencing 1 January 2023 aim to help entities to provide accounting policy disclosures that are more useful by:

  1. Replacing the requirement for entities to disclose ‘significant accounting policies’ with a requirement to disclose ‘material accounting policy information; and
  2. Adding guidance on how entities apply the concept of materiality in determining accounting policy disclosures.

How can an entity apply the new requirements?

In order to assess whether accounting policy information is material to an entity’s financial statements, the flow chart below can assist, this is based on Diagram 2 in AASB Practice Statement 2 Making Materiality Judgements (PS2):

The amendments were made to AASB 101 Presentation of Financial Statements and AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities.

Can I use my previous accounting policy disclosures?

The ability to roll over your previous accounting policies without any changes will depend on how the information is presented and whether the previous accounting policies are determined to be material accounting policy information.

It still seems that the disclosure of immaterial accounting policy is acceptable, as long as it does not obscure material information. This may mean not giving immaterial accounting policy information more prominence or not presenting immaterial information together with material information, so it is unable to be distinguished.

Some entities have already tailored their accounting policy information to present these together with the related note in the financial statements (for example, the accounting policy note for revenue is presented with the revenue disaggregation disclosures, rather than with all other policies in an accounting policy note). This may be seen as a good way to make sure material transactions, other events and conditions have a related accounting policy note and also to improve the usefulness of the accounting policy information.

Next steps

For more information, particularly in relation to the indicators of materiality, see our newly released Financial Reporting and Accounting Guide on this topic [link].

Determining whether accounting policy information is material or not requires judgement. Entities should therefore:

  1. Revisit accounting policy information disclosures prior to their respective balance date;
  2. Update accounting policy information taking into account materiality considerations and the requirement to focus on how the entity applied the requirements of Australian Accounting Standards to its own circumstances providing entity-specific information.
  3. Remove standardised or boilerplate information that duplicates or summarises the requirements of accounting standards where this information is not considered material.


This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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