The Saudi Organization for Chartered and Professional Accountants has adopted the amendments made by the International Accounting Standards Board to IAS 1: as this update aims to focus on disclosure of important information about accounting policies instead of disclosure of significant accounting policies.
The amendment is as follows:
The use of the word "material" instead of the word "significant" because the word "material" is defined in the standards, and it is related to the extent to which the presence or absence of information affects the decisions made by the main users of the general purpose financial statements on the basis of those financial statements.
Focusing on the importance of the information related to the accounting policy rather than the importance of the amounts related to the accounting policy.
To clarify the objective of the amendment, IASB provided a number of examples of significant accounting policies information, including:
Entity's changes to its accounting policies during the reporting period.
Entity's choice of an accounting policy from among the optional alternatives in one of the standards.
Entity establishes an accounting policy in accordance with IAS no. 8 with no financial reporting standard specifically applicable.
The accounting policy is related to one of the areas in which the entity needs to exercise important judgments or make important assumptions about it when implementing the accounting policy.
The required accounting was complex and the users of the entity’s financial statements would not have understood those transactions, events or other circumstances of materiality had it not been for that information.
The amendment emphasized that the greatest benefit for users of financial statements lies in the disclosure of accounting policies information that focuses on how the entity implements the requirements of the financial reporting standards to its own circumstances and then provides information related to the entity itself, in comparison with the benefit of disclosing typical information, or information that repeats or just summarizes the requirements of the standards.
It should be noted that the International Board has adopted the proposal of SOCPA submitted to the Board. The proposal indicated that the focus should be on disclosure of important information related to the applied accounting policies, as the importance of disclosure of the accounting policy is related to the importance of the information related to it, and not from the accounting policy itself, especially when the accounting policy is adapted according to the company's circumstances.