Developing IFRS Standards

Developing IFRS Standards?

The process that the International Accounting Standards Board (IASB) uses to issue new International Financial Reporting Standards (IFRS) is developed based on an international consultation process, the ‘due process, that is engaging interest from individuals and organizations globally

Due process

When processing a new standard, the "due procedure" entails four steps. The actions are as follows: consultation on the agenda, research programme, the programme for creating standards, and maintenance programme, which includes post-implementation reviews.

Consultation on the agenda

The IASB conducts a thorough assessment and consultation process every five years to establish the priorities for creating international standards and create a project work schedule. Between agenda consultations, the IASB may, if necessary, add issues to its work plan. This may include subjects covered by standards post-implementation evaluations; the IFRS Interpretations Committee may also ask the IASB to look into a certain matter.

Research Initiative

IASB starts most projects with research to investigate the problems, find potential solutions, and determine whether standard-setting is necessary. The IASB frequently outlines its proposals in a discussion paper and requests public input. The IASB starts setting standards when there is enough evidence that an accounting problem exists, the problem is important enough to warrant revising an existing accounting standard or releasing a new one, and a workable solution can be found.

Standard-setting programme

The IASB typically reviews the research, including feedback on the discussion paper, before proposing revisions to existing accounting standards or the issuance of new ones in order to address problems discovered during research and consultation. An exposure draught is released for public comment when proposals for a new accounting standard or an update to an existing standard are made. Technical staff from the IASB and the IFRS Foundation talk to stakeholders from all over the world to get more information. Before releasing a new accounting standard or making a change to an existing standard, the IASB evaluates comments and revises suggestions.

Maintenance Program

Even after an accounting standard is published, IASB development continues. The IASB also supports the consistent application of accounting standards and maintains them. This process includes consulting on the implementation of a new or amended accounting standard to identify any implementation or application problems that may need to be addressed. If issues arise, the IFRS Interpretations Committee may decide to create an IFRIC interpretation of the accounting standard or recommend a narrow-scope amendment. Such amendments follow the IASB's normal due process.

Post-implementation Reviews

The IASB conducts research through a post-implementation assessment after a new accounting standard has been in use for a few years to determine whether the standard is accomplishing its goal and, if not, whether any amendments should be taken into consideration. The post-implementation evaluation may lead to the IASB beginning a new study.