Please Help me Paraphrase this without changing the meaning.

(i) Definition of an accounting policy:

Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. When an IAS/ IFRS (or an Interpretation) specifically applies to a transaction, other event or condition, the accounting policy or policies applied to that item shall be determined by applying the Standard or Interpretation and considering any relevant Implementation guidance issued by the IASB for the Standard or Interpretation.

An entity shall select and apply its accounting policies consistently for similar transactions, other events and conditions, unless a Standard or an Interpretation specifically requires or permits otherwise.

The use of reasonable estimates is an essential part of the preparation of financial statements and does not undermine their reliability. Examples include bad debts, inventory obsolescence, fair values of assets, useful lives of assets and warranty obligations. A change in accounting estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset, that results from the assessment of the present status of, and expected future benefits and obligations associated with, assets and liabilities.

1. Change in accounting policy:

An entity shall change an accounting policy only if the change:

• is required by a Standard or an Interpretation; or if it
• results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entitys financial position, financial performance or cash flows.

An entity shall account for a change in accounting policy resulting from the initial application of a Standard or an Interpretation in accordance with the specific transitional provisions, if any, in that Standard or Interpretation. Where this does not apply, the entity shall apply the change retrospectively. This means that the accounts must be altered so that they contain the numbers which would have been there had the new policy always been in force. However, this will not apply if it is impracticable to determine either the period specific effects or the cumulative effect of the change. The initial application of a policy to revalue assets is not dealt with in this manner.

2. Change in accounting estimate:

The effect of a change in an accounting estimate, shall be recognized prospectively (i.e. from the date of the change onward) by including it in profit or loss in the period of the change and future periods, if relevant.

3. Correction of prior period errors:

Prior period errors are omissions from, and misstatements in, the entitys financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

• was available when financial statements for those periods were authorized for issue; and
• could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.

Examples of such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts and fraud.

Except to the extent that it is impracticable to determine either the period-specific effects or the cumulative effect of the error, an entity shall correct material prior period errors retrospectively in the first set of financial statements authorized for issue after their discovery. This means that the accounts must be altered so that they contain the numbers which would have been there had the error never occurred. The following actions must be taken:

• Restate the comparative amounts for the prior period(s) presented in which the error occurred.
• If the error occurred before the earliest prior period presented, restate the opening balances of assets, liabilities and equity for the earliest prior period presented.
• Adjust the opening balance in the statement of changes in equity.

Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions of users taken on the basis of the financial statements

The effect of the fraud existed in previous periods although the directors of Lifewest Ltds were unaware of it

Hence, the financial statements should be corrected retrospectively. As the current financial statements will show one comparative year, both of these years will be restated. Any effect predating the earliest period presented will be adjusted for through opening equity balances. The incremental effects of the fraud will be reported through profit or loss each year, appearing as additional expenses. The cumulative effects will appear in the statement of financial position, through a reduction of the trade receivables and retained earnings figures. The opening equity balances in the statement of changes in equity should show the original balance, adjusted by the cumulative effect of the adjustment. So, users can reconcile the figures with those published in the previous year.