IAS 8 Accounting policies, changes in accounting estimates and errors is a standard that provides guidance on how to account for changes in accounting policies, changes in accounting estimates, and the correction of errors in financial statements. The standard requires that a prior period error should be adjusted by restating prior year comparatives as if the error had not occurred. This adjustment is made through the account of retained earnings, and it does not impact the reported statement of profit or loss and other comprehensive income.

The first question is -

a. Discuss and evaluate how the requirements of IAS 8 Accounting policies, changes in accounting estimates and errors can be used as a method of manipulating earnings.

b. Based on the discussion and evaluation in part a, explain the implications this may have for using the earnings per shares as a performance indicator.