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IFRS foundation standard setting process.

International Financial Reporting Standards (IFRS Standards) are developed through an international consultation process, the “due process”, which involves interested individuals and organizations from around the world. The due process comprises six stages, with the Trustees of the IFRS Foundation having the opportunity to ensure compliance at various points throughout:

Setting the agenda

The IASB evaluates the merits of adding a potential item to its agenda, also known as the work plan, mainly by reference to the needs of investors. The IASB considers: the relevance to users of the information and the reliability of information that could be provided; whether existing guidance is available; the possibility of increasing convergence; the quality of the standard to be developed; and resource constraints. 



 Planning the project

When adding an item to its active agenda, the IASB also decides whether to: conduct the project alone; or jointly with another standard-setter. Due process is followed under both approaches. After considering the nature of the issues and the level of interest among constituents, the IASB may establish a Consultative group at this stage. A team is selected for the project by the two most senior members of the technical staff: The Director of Technical Activities; and The Director of Research.

Developing and publishing the Discussion Paper, including public consultation

Although a Discussion Paper is not mandatory, the IASB normally publishes it as its first publication on any major new topic to explain the issue and solicit early comment from constituents. If the IASB decides to omit this step, it will state why. Typically, a Discussion Paper includes a comprehensive overview of the issue; possible approaches in addressing the issue; the preliminary views of its authors or the IASB; and an invitation to comment.

Developing and publishing the Exposure Draft, including public consultation

Publication of an Exposure Draft is a mandatory step in due process. Irrespective of whether the IASB has published a Discussion Paper, an Exposure Draft is the IASB’s main vehicle for consulting the public. Unlike a Discussion Paper, an Exposure Draft sets out a specific proposal in the form of a proposed Standard (or amendment to an existing Standard). The development of an Exposure Draft begins  with  the  IASB  considering:  issues  on  the  basis  of  staff  research  and recommendations; comments received on any Discussion Paper; and suggestions made  by  the  IFRS  Advisory  Council,  Consultative  groups  and  accounting standard-setters, and arising from public education sessions



Developing and publishing the Standard

The development of an IFRS Standard is carried out during IASB meetings, when the IASB considers the comments received on the Exposure Draft. After resolving issues arising from the Exposure Draft, the IASB considers whether it should expose its revised proposals for public comment, for example by publishing a second Exposure Draft.

Procedures after a Standard is issued

The development of an IFRS Standard is carried out during IASB meetings, when the IASB considers the comments received on the Exposure Draft. After resolving issues arising from the Exposure Draft, the IASB considers whether it should expose its revised proposals for public comment, for example by publishing a second Exposure Draft.

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