Change in accounting policy
In one sentenceA business moving from one accounting method to another for the same item; it is applied retrospectively as if the new method had always been used.
Simply put
An accounting policy is the method you have chosen, such as costing inventory at weighted average. Do not change it unless a standard requires it or the new method gives more reliable information.
On a change, international standard IAS 8 requires adjusting the comparative figures and the opening balance of retained earnings so the years remain comparable, with disclosure of the reason and the effect.
Example
A store that costed its inventory using first in, first out decided to move to weighted average because it suits its business better: it recalculates the previous year's inventory and cost of sales using the new method and adjusts the comparative figures, rather than charging the whole difference to this year's profit.
Don't confuse it with
Change in accounting estimatesChanging the method itself is a policy change applied retrospectively, while revising an estimated figure within the method is an estimate applied to the future.