Procedures for Selecting Accounting Policies (IAS 8):

1. Application of specific IFRSs:
   When selecting an accounting policy, an entity must first consider whether there is an International Financial Reporting Standard (IFRS) or an IFRIC Interpretation that applies to the specific transaction, event, or condition. If a specific IFRS exists, the entity must apply that standard in full.
2. Use of Judgment if no specific IFRS applies:
   If no specific IFRS or IFRIC Interpretation applies to the transaction, event, or condition, management should use its judgment to develop and apply an accounting policy that results in financial information that is relevant and reliable. This ensures that the financial statements provide useful information to users.
3. Hierarchy of guidance sources:
   In making its judgment, management must refer to the following hierarchy of sources in descending order:
   • The requirements and guidance in IFRSs and Interpretations that deal with similar and related issues.
   • The definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Conceptual Framework for Financial Reporting.
4. Other sources of guidance:
   If necessary, management may also consider the most recent pronouncements of other standard-setting bodies (e.g., national standards), other accounting literature, and accepted industry practices, provided they do not conflict with the above sources of guidance.
5. Consistency and comparability:
   Once selected, accounting policies should be applied consistently to similar transactions, events, or conditions unless an IFRS or interpretation specifically requires or permits categorization.

Summary of Steps:

• Step 1: Apply an IFRS or IFRIC Interpretation if available.
• Step 2: If no specific IFRS exists, apply judgment to develop a policy that results in relevant and reliable information.
• Step 3: Refer to the hierarchy of guidance, starting with related IFRSs and the Conceptual Framework.
• Step 4: Consider other sources of accounting literature, if necessary.
• Step 5: Ensure consistency in applying policies across similar items.

Application of specific IFRSs:  1 mark
Use of judgment and hierarchy of guidance:  2 marks
Consistency in application of accounting policies:  1 mark

Total: 4 marks