The International Accounting Standards Board (IASB) follows a structured and transparent process when developing International Financial Reporting Standards (IFRS). This process ensures that all stakeholders, such as businesses, regulators, investors, and the public, have an opportunity to participate. Here’s an outline of the process, which typically involves several key stages:
1. Research Programme (IASB Staff Involvement)
- IASB Staff initiates the process by identifying and analyzing issues where improvements in financial reporting are needed. They conduct research on accounting topics and engage with stakeholders.
- A Discussion Paper (DP) may be developed to outline the issues and possible solutions, giving interested parties a chance to provide feedback before a formal proposal is created.
- The IASB Staff gathers information and presents findings to the IASB for consideration.
2. Developing an Exposure Draft (ED)
- Once the research phase is complete, and the IASB believes that standard-setting is needed, the staff prepares an Exposure Draft (ED)
- The ED is a draft version of the proposed standard and includes detailed guidelines for financial reporting.
- It is published for public comment, and stakeholders can provide feedback within a specified period (typically 120 days).
3. Consultation and Public Feedback
- The IASB reviews comments received from the public consultation, including feedback from preparers, auditors, regulators, investors, and other interested parties.
- IASB Staff helps by summarizing the feedback and presenting it to the Board for further deliberation.
4. Re-deliberation
- The IASB re-deliberates the proposals based on the feedback received from the exposure draft and public consultations.
- Additional outreach and consultation may occur at this stage to address specific concerns.
- Amendments to the draft standard may be made during this phase.
5. Finalizing the Standard
- After re-deliberation, the IASB finalizes the standard. The IASB Staff** prepares the final version of the IFRS, incorporating any changes decided during the re-deliberation phase.
- The final IFRS is then published along with a Basis for Conclusions**, which explains the rationale behind the Board's decisions.
6. Post-Issuance Review
- Once the standard has been issued, the IASB monitors its implementation and effectiveness.
- A **Post-Implementation Review (PIR)** may be conducted after a certain period to evaluate whether the standard is working as intended and if any further amendments are necessary.
Key Participants in the Process:
- IASB Staff: Conducts research, prepares drafts, and analyzes feedback.
- Advisory Bodies: Groups such as the IFRS Advisory Council and the IFRS Interpretations Committee provide expert advice to the IASB.
- Public and Stakeholders: Businesses, investors, accountants, and regulators provide input through the comment process and consultations.
This rigorous process ensures that IFRS are developed with broad consultation, transparency, and due process to meet the needs of global financial reporting.