IFRS STANDARD SETTING PROCESS

 

NOW THAT WE SEE HOW IMPORTANT IFRS IS TO MAKING THE WORLD AN INTEGRATED ECONOMY, LET'S SEE HOW IT IS DEVELOPED.





LET'S WATCH A VIDEO TO UNDERSTAND BETTER.




THE STEPS IN THE IFRS STANDARDS SETTING PROCESS HAVE BEEN DELINEATED BELOW.


  1. SETTING THE AGENDA   



  • THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB), DEVELOPS HIGH QUALITY FINANCIAL REPORTING STADARDS, SEEKING TO ADDRESS A DEMAND FOR BETTER QUALITY INFORMATION THAT IS OF VALUE TO THOSE USERS OF FINANCIAL REPORTS.
  • IASB CONSIDERS THE FOLLOWING : 
    • RELEVANCE TO USERS OF THE INFORMATION
    • THE RELIABILITY OF INFORMATION THAT COULD BE PROVIDED
    • EXISTING GUIDANCE AVAILABLE
    • POSSIBILITY OF INCREASING CONVERGENCE
    • QUALITY OF THE IFRS TO BE DEVELOPED     
    • RESOURCE CONSTRAINTS
  • STAFF REVIEWS AND RAISES ISSUES THAT MIGHT WARRANT IASB'S ATTENTION
  • IASB DISCUSSES ON THE COMMENTS OF OTHER STANDARD SETTERS, IFRS ADVISORY COUNSIL, IFRS INTERPRETATIONS COMMITTEE, ETC
  • CONSIDERATION OF CONVERGENCE INITIATIVES
  • ALL DECISIONS MADE BY A MAJORITY VOTE AT A IASB MEETING



      2. PLANNING THE PROJECT        



         
  • CHANGES TO BE ADDED IN THE ACTIVE AGENDA
  • ALL CRITERIA TO BE MET FOR THE ITEM TO QUALIFY FOR INCLUSION IN ANNUAL IMPROVEMENTS
  • AMENDMENTS FOLLOW THE SAME DUE PROCESS AS OTHER IASB PROJECTS
  • PRIMARY OBJECTIVE - TO ENHANCE QUALITY OF IFRS 
  • IASB NOW ESTABLISHES A WORKING GROUP AND A PROJECT TEAM 
  • PROJECT MANAGER DRAWS UP A PROJECT UNDER SUPERVISION OF DIRECTORS OF TECHNICAL STAFF



      3. DEVELOPING AND PUBLISHING THE DISCUSSION PAPER

 

  • NORMALLY THE FIRST PUBLICATION BY IASB TO SOLICIT EARLY COMMENTS FROM CONSTITUENTS
  • IT INCLUDES OVERVIEW OF THE ISSUE, POSSIBLE APPROACHES IN ADDRESSING THE ISSUE PRELIMINERY VIEWS OF THE AUHTOR AND INVITATION TO COMMENT
  • DISCUSSION PAPERS WHICH ARE DRAWN BY OTHER STANDARD SETTERS ARE DISCUSSED IN IASB MEETINGS. IASB ALSO CHECKS THE APPROPRIATENESS OF ANALYSIS ON WHICH TO INVITE PUBLIC COMMENTS
  • IASB PREPARES ITS DISCUSSION PAPERS IN CONSIDERATION OF THE RECOMMENDATIONS OF STAFF, IFRS ADVISORY COUNCIL, WORKING GROUPS, ETC
  • GENERAL TIME LIMIT FOR ACCEPTING COMMENTS IS 120 DAYS, WHICH MAY BE FURTHER EXTENDED FOR MAJOR PROJECTS
  • COMMENT LETTERS ARE POSTED ON THE IASB WEBSITE 
  • IASB MAY CONDUCT FIELD VISITS, PUBLIC HEARINGS OR ROUND TABLE MEETINGS FOR MORE INPUT ON AN ISSUE



      4. DEVELOPING AND PUBLICATION OF EXPOSURE DRAFT 

    


  • SETS OUT SPECIFIC PROPOSAL IN THE FORM OF A PROPOSED IFRS
  • IT IS PREPARED CONSIDERING STAFF RESEARCH AND RECOMMEDATIONS, COMMENTS RECEIVED ON DISCUSSION PAPER, SUGGESTIONS OF IFRS ADVISORY COUNCIL, WORKING GROUPS, ETC
  • MINIMUM OF NINE VOTES IS NECESSARY TO PUBLISH AN EXPOSURE DRAFT FOR PUBLIC COMMENT
  • A PERIOD OF 120 DAYS IS ALLOWED FOR COMMENT ON EXPOSURE DRAFT. IF MATTER IS URGENT, THEN A PERIOD OF NOT LESS THAN THIRTY DAYS IS ALLOWED FOR COMMENTS WITH THE PRIOR APPROVAL FROM 75% OF TRUSTEES
  • IASB THEN REVIEWS THE COMMENT LETTERS AND RESULTS OF OTHER CONSULTATIONS
  • IASB MAY CONDUCT FIELD VISITS, PUBLIC HEARINGS OR ROUND TABLE MEETINGS FOR MORE INPUT ON AN ISSUE
                              


      5. DEVELOPING AND PUBLISHNG THE STANDARD 


  • IFRS IS DEVELOPED IN THE IASB MEETINGS, AFTER CONSIDERATION OF COMMENTS ON THE EXPOURE DRAFT
  • IASB CONSIDERS WHETHER TO EXPOSE REVISED PROPOSALS FOR PUBLIC COMMENT
  • IASB PREPARES A PROJECT SUMMARY AND FEEDBACK STATEMENT, WHICH GIVE DIRECT FEEDBACK TO THE COMMENTS, IDENTIFY THE MOST SIGNIFICANT MATTERS RAISED IN COMMENTS AND IASB'S RESPONSE TO THOSE MATTERS
  • IF IASB IS SATISFIED WITH THE CONCLUSION, IT INSTRUCTS THE STAFF TO DRAFT THE IFRS
  • IFRS INTERPRETATIONS COMMITTEE REVIEWS A PRE-BALOT DRAFT
  • BEFORE BALLOT, A NEAR-FINAL DRAFT IS PLACED ON THE WEBSITE FOR ITS PAID SUBSCRIBERS
  • AFTER ALL ISSUES ARE RESOLVED, AND IASB MEMBERS BALLOTED IN FAVOUR OF PUBLICATION, IFRS IS ISSUED
  • THIS IS FOLLOWED BY PUBLICATION OF ANY PROJECT SUMMARY, FEEDBACK STATEMENT AND ANY EFFECT ANALYSIS



      6. AFTER THE STANDARD IS ISSUED

  • POST ISSUANCE OF AN IFRS STANDARD, IASB MEMBERS HOLD REGULAR MEETINGS WITH INTERESTED PARTIES TO UNDERSTAND UNANTICIPATED ISSUES RELATING TO IMPLEMETATION AND POTENTIAL IMPACT OF ITS PROVISIONS
  • CONSISTENCY IN APPLICATION OF IFRS IS ENSURED THROUGH EDUCATIONAL ACTIVITIES
  • IASB CARRIES OUT POST IMPLEMENTATION REVIEW OF EACH NEW IFRS OR MAJOR AMENDMENTS, LIMITED TO IMPORTANT AND CONTENTIOUS ISSUES
  • REVIEWS ARE ALSO CARRIED OUT DUE TO CHANGES IN FINANCIAL REPORTING ENVIRONMENT AND REGULATORY REQUIREMENTS, ADVERSE COMMENTS ON QUALITY OF IFRS
  • IASB CONDUCTS INFORMAL CONSULTATIONS THROUGHOUT THE IMPLEMENTATION OF THE IFRS OR AMENDMENT











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