Change in Discount Versus Change in Estimate

Applies to: DRO (IAS 37) module | Audience: Customers | Last reviewed: 08/04/2026

In this article

• Why the distinction exists
• Reviewing the rates on the current plan
• Updating the interest rate group
• Adding a new plan so the rates take effect
• How the split is calculated
• Rules that govern the split
• Where the split appears

Why the distinction exists

When a customer revises a DRO plan, IFRS does not only ask whether the provision changed. It asks why, and it wants the effect of a discount rate change reported separately from the effect of a change in estimate.

Under IAS 37, a material discount rate change requires the customer to re-measure the provision and to disclose how much of the movement came from the rate and how much came from everything else. On every plan change, ENFOS splits the total adjustment into two categories, change in discount and change in estimate, and the two always add up to the total adjustment.

Change in estimate also carries the effect of inflation. ENFOS isolates that piece as well, showing it as an inflation component inside the change in estimate.

Reviewing the rates on the current plan

Assumptions on the current plan shows which interest rate group the plan uses, the current inflation, discount, and accretion rates, and the date those rates became effective.

Updating the interest rate group

1. Go to Administration, then Settings.
2. Open the Finance module, go to Treasury, and switch Treasury to Interest Rates.
3. Confirm the rates shown match the ones on the Assumptions screen, and identify the interest rate group the plan uses.
4. Set the start date to the date the new plan becomes effective.
5. Enter the new inflation, discount, and accretion rates.
6. Add the rates, then save the changes.

The same screen shows the previous version of the rates, so a change is visible alongside what it replaced. Once saved, the interest rate group carries the new rates from that effective date onward.

Adding a new plan so the rates take effect

Updating the interest rate group does not by itself change an existing plan. A new plan has to be added to the project for the new rates to take effect on it.

The Add Plan fields work as they do on any plan change. What differs is the reason, which should record the discount rate change and note that the inflation rate has changed as well.

Leaving the estimate unchanged isolates the effect of the rates, so the resulting plan shows the rate movement on its own.

How the split is calculated

A plan change often includes both a rate movement and an estimate movement at once. ENFOS separates the two by running the present value calculation four times and comparing the results.

• A is the balance before the adjustment, the starting point.
• B is the new plan valued with the old rates.
• C is the new plan valued with the new inflation rate but the old discount rate.
• D is the new plan valued with the new rates, both inflation and discount.

From those four, the components fall out by subtraction:

• Change in estimate excluding inflation is B minus A.
• The inflation component is C minus B.
• Change in discount is D minus C.

The three added together give the total adjustment.

Rules that govern the split

• The split happens only on plan changes, never on an initial plan, because there is no prior plan to compare against.
• ENFOS checks that the three components reconcile to the total within a tolerance of one cent.
• If they do not reconcile, the platform stops and shows a total adjustment validation error. That is a signal to contact support rather than something to fix in the plan.

Where the split appears

The Plan Summary has a Change in Discount view that shows the breakdown described above.

In Balance under Plan Details, Change in Discount and Change in Estimate appear as their own columns, month by month.

Related articles

• Creating a plan change: revised by replacing, not by layering
• Creating an initial DRO plan
• Cost, recovery, and net planning
• Core DRO concepts and terminology