Approval by at least eight members of the IASB is required for the publication of an
exposure draft and IFRS (which includes final interpretations of the Interpretations
Committee), if there are fewer than 14 members of the IASB. If there are 14 members,
approval is required by at least nine members.24 Other decisions of the IASB, including
the publication of a discussion paper, require a simple majority of the members present
at a meeting that is attended by at least 60% of the members.25 The IASB has full
discretion over its technical agenda and over project assignments on technical matters.
It must, however, consult the Trustees on its agenda, and the Advisory Council on major
projects, agenda decisions and work priorities. In addition, the IASB is required to carry
out public consultation every five years in developing its technical agenda.26 The most
recent agenda consultation took place in August 2015. In November 2016, the IASB
published the IASB® Work Plan 2017-2021 (Feedback Statement on the 2015 Agenda
Consultation) on its agenda consultation and its five-year plan. The IASB adopted a
central theme for its activities: ‘Better Communication in Financial Reporting’.27
The IASB meets monthly, but not in August. These meetings are open to the public and
meeting materials are available on the IASB’s website.
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2.5
The IFRS Interpretations Committee (the Interpretations
Committee)
For IFRS to be truly global standards, consistent application and interpretation is
required. The objectives of the Interpretations Committee are to interpret the
application of IFRS, provide timely guidance on financial reporting issues that are not
specifically addressed in IFRS and undertake other tasks at the request of the IASB.28
The national accounting standard-setting bodies and regional bodies involved with
accounting standard-setting are normally consulted on issues referred to the Interpretations
Committee.29 The Interpretations Committee is expected to address issues:30
‘(a) that have widespread effect and have, or are expected to have, a material effect on
those affected;
(b) where financial reporting would be improved through the elimination, or
reduction, of diverse reporting methods; and
(c) that can be resolved efficiently within the confines of existing IFRSs and the
Conceptual Framework for Financial Reporting.’
In addition to developing interpretations, the Interpretations Committee develops
minor or narrow scope amendments, including ‘Annual Improvements’. The ‘Annual
Improvements Process’ is designed to deal with ‘non-urgent, minor amendments to
IFRSs’. Issues dealt with in this process arise from matters raised by the Interpretations
Committee and suggestions from IASB staff or practitioners, and focus on areas of
inconsistency in IFRS or where clarification of wording is required.
The premise behind the Annual Improvements Process is to streamline the IASB’s standard-
setting process. If a number of minor amendments are processed together, there will be
benefits both to constituents and the IASB. The Interpretations Committee assists the IASB
by reviewing and recommending potential amendments to IFRS. ‘Annual Improvements’ is
on the IASB’s work plan like its other projects and is subject to the same due process.
If the Interpretations Committee does not plan to add an item to its work programme,
it publishes a tentative rejection notice in the IFRIC Update and on the IFRS Foundation
website and requests comments on the matter. The comment period for rejection
notices is normally at least 60 days. After considering comments received, the
Interpretations Committee will either confirm its decision and issue a rejection notice,
add the issue to its work programme or refer the matter to the IASB. Rejection notices
do not have the authority of IFRSs and, therefore, do not provide mandatory
requirements. However, they should be seen as helpful, informative and persuasive.
The IASB does not ratify rejection notices.31
The Interpretations Committee has 14 voting members. The chair, who is appointed by
the Trustees, is a member of the IASB, the Director of Technical Activities or an
appropriately qualified individual. The chair does not have the right to vote. The Trustees
may appoint representatives of regulatory organisations, who have the right to attend and
speak at meetings but not the right to vote.32 Currently, the Basel Committee on Banking
Supervision, European Commission and IOSCO have observer status. The quorum for a
meeting is 10 members,33 and approval of draft or final interpretations requires that not
more than four voting members vote against the draft or final interpretation.34
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The Interpretations Committee meets six times a year. All technical decisions are taken
at sessions that are open to public observation. The Interpretations Committee supports
the IASB in improving financial reporting through timely identification, discussion and
resolution of financial reporting issues within the IFRS framework.35 Although the
Interpretations Committee develops interpretations, because they are part of the
respective IFRSs, they must be ratified by the IASB.36
2.6
The IASB’s and IFRS Interpretations Committee’s Due Process
Handbook
The Trustees’ Due Process Oversight Committee (DPOC) is responsible for overseeing
the due process procedures of the IASB and Interpretations Committee throughout all
the development stages of a standard or an interpretation, including agenda-setting and
post-implementation reviews (PIRs).37
The Due Process Handbook for the IASB and IFRS Interpretations Committee (the
Handbook) describes the due process requirements of the IASB and Interpretations
Committee.38 The requirements are built on the following principles:39
• transparency – the IASB conducts its standard-setting process in a transparent manner;
• full and fair consultation – considering the perspectives of those affected by IFRS
globally; and
• accountability – the IASB analyses the potential effects of its proposals on affected
parties and explains the rationale for why it made the decisions it reached in
developing or changing a standard.
In order to gain a wide range of views from interested parties throughout all stages of
the development of IFRS, the Trustees and the IASB have established consultative
procedures with the objective of ensuring that, in exercising its independent decision-
making, the IASB conducts its standard-setting process in a transparent manner.40 The
Trustees of the IFRS Foundation published an updated version of the Handbook in June
2016 which includes an enhanced due process for the development and maintenance of
the IFRS Taxonomy.41 The Handbook specifies some minimum steps that the IASB and
the Interpretations Committee are required to follow before a standard or interpretation
can be issued.42 The following due process steps are mandatory:43
• debating any proposals in one or more public meetings;
• exposing for public comment a draft of any proposed new standard, proposed
amend
ment to a standard or proposed interpretation with minimum comment
periods;
• considering in a timely manner those comment letters received on the proposals;
• considering whether the proposals should be exposed again;
• reporting to the IFRS Advisory Council (see 2.7 below) on the technical
programme, major projects, project proposals and work priorities; and
• ratification of an interpretation by the IASB.
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The steps specified in the Constitution that are ‘non-mandatory’ include:44
• publishing a discussion document (for example, a discussion paper) before an
exposure draft is developed;
• establishing consultative groups or other types of specialist advisory groups;
• holding public hearings; and
• undertaking fieldwork.
If the IASB decides not to undertake any of the non-mandatory steps, it is required to
inform the DPOC of its decision and reason (known as the ‘comply or explain’
approach). Those explanations must be published in the decision summaries and in the
basis for conclusions with the exposure draft or IFRS in question.45
Although not mandatory, the IASB conducts public meetings and roundtables to ensure
that it has appropriate input from its constituents.
The IASB normally allows a minimum period of 120 days for comment on an exposure
draft. If the matter is narrow in scope and urgent, the IASB may consider a comment
period of no less than 30 days, but it will only set a period of less than 120 days after
consulting, and obtaining approval from, the DPOC.46
Under a ‘fast track’ comment process, if the matter is exceptionally urgent, and only
after formally requesting and obtaining prior approval from 75% of the Trustees, ‘the
IASB may reduce the period for public comment on an exposure draft to below 30 days
but may not dispense with a comment period’.47
2.7
The IFRS Advisory Council (the Advisory Council)
The Advisory Council (whose members are appointed by the Trustees) provides a
forum for geographically and functionally diverse organisations and individuals with an
interest in international financial reporting to:
• provide input on the IASB’s agenda, project timetable and project priorities; and
• give advice on projects, with emphasis on application and implementation issues,
including matters that may warrant the attention of the Interpretations Committee.48
A secondary objective of the Advisory Council is ‘to encourage broad participation in
the development of IFRS as high-quality, globally-accepted standards.’49
The Advisory Council comprises thirty or more members, having a diversity of
geographical and professional backgrounds. The chair of the Council is appointed by
the Trustees, and may not be a member of the IASB or a member of its staff.50 The
Advisory Council normally meets at least two times a year, and its meetings are open
to the public. It is required to be consulted by the IASB in advance of the IASB’s
decisions on major projects and by the Trustees in advance of any proposed changes
to the Constitution.51
Members are appointed for an initial term of three years and may be asked to remain
for up to three additional years.52
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2.8
Accounting Standards Advisory Forum (ASAF)
The ASAF, established in 2013, is an advisory group consisting of national accounting
standard-setters and regional bodies, the purpose of which is to provide technical
advice and feedback to the IASB.
The membership of the ASAF consists of 12 non-voting members (appointed by the
Trustees), plus the chair, who is the IASB chair or vice-chair. To ensure a broad
geographical representation, the members are from the following geographic regions:53
• one member from Africa;
• three members from the Americas (North and South);
• three members from the Asia/Oceania region;
• three members from Europe (including non-EU); and
• two members appointed from any area of the world at large, subject to maintaining
overall geographic balance.
The ASAF meets four times a year, and its meetings are open to the public.
The objective of the ASAF is ‘to provide an advisory forum where members can
constructively contribute towards the achievement of the IASB’s goal of developing
globally accepted high-quality accounting standards.’ The ASAF was established to:54
• support the IFRS Foundation in its objectives, and contribute towards the
development of a single set of high quality understandable, enforceable and
globally accepted financial reporting standards;
• formalise and streamline the IASB’s collective engagement with the global community
of national standard setters and regional bodies in its standard setting process to
ensure that a broad range of national and regional input on major technical issues
related to the IASB’s standard setting activities are discussed and considered; and
• facilitate effective technical discussions on standard setting issues, with
representatives at a high level of professional capability and with a good
knowledge of their jurisdictions.
As required by the ASAF’s Terms of Reference, the Trustees completed their second review
of the ASAF in 2018, following the first review undertaken in 2015. There was very positive
feedback from the review, highlighting that the ASAF continues to be a key component of
the IFRS Foundation’s engagement strategy with national standard-setters. Actions taken
following the 2015 review have resulted in positive change and there were improvements
made to the ‘feedback loop’ between the Board and the ASAF. As a result of the review, the
Trustees have decided not to incorporate consultation with the ASAF as a mandatory due
process step in the Handbook. The Trustees also found no compelling reason to amend the
Constitution to incorporate an explicit reference to the ASAF. The Trustees are amending
the Terms of Reference to permit one ASAF meeting a year to be held via videoconference.
In addition, the Trustees decided that formal three-yearly reviews of ASAF are no longer
necessary and will amend the ASAF Terms of Reference accordingly.55
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2.9
Other advisory bodies
In addition to the Advisory Council and the ASAF, discussed in 2.7 and 2.8, respectively,
above, the IASB has a number of other formal advisory bodies that provide input on its
work and resources to consult. Meetings with the advisory bodies are held in public and
meeting materials are available on the IASB’s website.
The IASB’s other advisory bodies are as follows:56
• Capital Markets Advisory Committee – provides the IASB with regular input from
the international community of users of financial statements;
• Emerging Economies Group – enhances the participation of emerging economies
in the development of IFRSs;
• Global Preparers Forum – provides the IASB with input from the international
preparer community;
• Islamic Finance Consultative Group – focuses on potential challenges link
ed to
applying IFRS to Shariah-compliant instruments and transactions;
• IFRS Taxonomy Consultative Group – helps develop the IFRS Taxonomy;
• SME Implementation Group – supports the international adoption of the IFRS for
SMEs and monitors its implementation;
• World Standard-setters Conferences –helps achieve the G20-endorsed objective
of global accounting standards;
• Transition Resource Group for Impairment of Financial Instruments – discusses
questions from stakeholders about the new impairment requirements for
financial instruments;
• Transition Resource Group for Revenue Recognition – informs the IASB and the
US Financial Accounting Standards Board (FASB) about potential
implementation issues that could arise when entities implement the new revenue
recognition standard;
• Transition Resource Group for Insurance Contracts – aids the implementation of
IFRS 17 – Insurance Contracts;
• Consultative Group for Rate Regulation – informs the project on rate regulation;
• Management Commentary Consultative Group – informs the project on
management commentary; and
• Temporary ad hoc expert advisory groups – the IASB may create temporary
ad hoc expert advisory groups to assist the IASB in specific project related areas.
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THE IASB’S TECHNICAL AGENDA AND CONVERGENCE
WITH US GAAP
3.1
The IASB’s current priorities and future agenda
The IASB’s 2018 activities focused on:57
• clarifying the definition of what information is material in preparing financial
statements in the final amendment – Definition of Material (Proposed
amendments to IAS 1 and IAS 8);
• developing a new accounting model to give users of financial statements better
information about a company’s incremental rights and obligations arising from its
rate-regulated activities; and
• working on a number of research projects, including business combinations under
common control, dynamic risk management, goodwill and impairment, financial
instruments with characteristics of equity, primary financial statements and
principles of disclosure.
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