Enhancing Financial Clarity: TAS 1 Revised

Keywords: Mazars, Thailand, TAS, Financial Statements, TAS 1

While the changes may, at first glance, seem minor, they can have a significant impact on public entities. The revised version of TAS 1 now mandates that ‘material’ accounting policy information be disclosed, for the benefit of users of the financial statements, rather than key policies merely being outlined. 

These changes require entities to disclose accounting policies in a manner that is more directly related to their operations. The goal of this shift from general summaries to customized disclosures is to provide users with the information they truly seek, enhancing the understandability of financial data for more informed decision-making. 

Question: What accounting policies are deemed ‘material’?  

Answer: 
Paragraph 117 of TAS 1 addresses this issue, emphasizing that accounting policies become significant when considered alongside other details in the entity’s financial statements. This comprehensive view is essential for influencing the decisions of users of financial statements who rely on the financial data provided.  

TAS 1 also outlines specific scenarios in which accounting policies gain importance:  

1. There are changes in accounting policy during the reporting period which affect the financial statements.
2. Accounting policies from various allowed alternatives outlined in financial reporting standards are chosen, such as choosing to value investment property at cost instead of fair value. 
3. Accounting policies which are crafted in accordance with TAS 8 due to the absence of specific financial reporting standards.  
4. There are accounting policies which require judgment or significant assumptions, with disclosure as mandated in paragraphs 122 and 125.  
5. There is complexity in accounting requirements which leads to potential misunderstanding on the part of users of the financial statements, especially when following multiple financial reporting standards for significant material items.

Key implications and considerations  

This section explores some of the insights that can be derived from the revised TAS 1, highlighting the crucial role that this revision can have on decision-making processes.  

Significance of accounting policy:  

• Policies regarding insignificant matters may not require disclosure.  
• Certain details are important due to their interconnected nature 
• Not all policies related to seemingly significant matters are inherently significant. 

Value of accounting policy information:  

• There is a focus on how entities apply financial reporting standards within their operational context.  
• The financial statements should provide specific insights beyond the standard requirements 

Discretion in matters of disclosure:  

• Insignificant details should not overshadow significant ones.  
• Transparency must be maintained throughout the disclosure process.

Compliance and transparency:  

• Entities should adhere to the disclosure requirements outlined in financial reporting standards.  
• The overall goal should be to ensure transparency, regardless of the significance of disclosed information. 

Impact of disclosure:  

• The financial statements should clarify how management’s decisions related to adopting accounting policies affect the financial figures reported.  
• The financial statements should provide contextual information alongside relevant estimates for transparency. 

In conclusion, the revision of TAS 1 represents a significant step towards enhancing the transparency and understandability of financial information. By providing users with comprehensive insights into accounting policies and their implications, entities can foster greater trust and confidence in their financial reporting practices. 

References (in Thai):  

Notification of the Accounting Profession No. 13/2566  

Summary of key points of TAS 1