Change from weighted average inventory to FIFO

Dec 21, 2022
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Saudi Arabia
We changed recently the ERP system in our company. We used to follow weighted average inventory costing. As per the new ERP system, FIFO is followed in inventory costing. Our company is a manufacturing company with lot of materials usage and it is little bit complicated process.
The external auditor claims this is a big change in accounting policy. He claims As per the requirements of IAS 8, this change in accounting policy should be applied retrospectively. As per IAS 8 “When a change in accounting policy is applied retrospectively, the entity shall adjust the opening balance of each affected component of equity for the earliest prior period presented and the other comparative amounts disclosed for each prior period presented as if the new accounting policy had always been applied”.
Accordingly, he requested Impact analysis over the inventories for the last 3 years. As per the requirements of IAS 8, the change in accounting policy along with the quantitative impact analysis need to be disclosed in the financial statements.
Practically, measuring the impact and analyzing it for last 3 years is very complicated process if it is not impossible.
Is there an accounting argument waives what the auditor is asking?

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