21 September 2012

EFRAG commented on the proposed IASB and IFRS Interpretations Committee Due Process Handbook

EFRAG welcomes the review of the Due Process Handbook and welcomes the principles based approach adopted in the revision. However EFRAG warns against adding too much detail in the proposed Handbook to avoid that the due process would merely result in a “ticking the box” exercise.

EFRAG believes that the Handbook should explain the objectives of the due process in terms of shared identification of needs for improvement of financial reporting; allowing for proper consultation and discussion; and setting the legitimacy of the resultant standards or interpretations by gathering arguments and evidence. The overarching principle of bringing improvement to financial reporting at an acceptable cost should be the sole driver for changes to standards and interpretations.

EFRAG in particular promotes shared due process and cooperation between the IASB and regional and national accounting standards bodies. EFRAG strongly believes that the results of effect analyses are essential inputs to the IASB decision-making process and should be scaled to the project significance and integrated into the standard-setting due process over the life cycle of projects. The Handbook should set guiding principles to how the IASB identifies and analyses users’ needs. EFRAG believes that results of public fatal flaw reviews, and when appropriate of field tests, should be assessed, in a public meeting, before the IASB makes its final decision on a standard or amendment.

EFRAG also recommends that the IFRS Interpretations Committee determines its consensus, not only consistently with current IFRS, but also after having assessed the resulting accounting requirement as leading to financial reporting that meets the qualitative characteristics of useful financial information as defined in the Conceptual Framework.

Press release

Final comment letter

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