EFRAG and ASB consider improving the accounting standards and financial reporting
01 February 2011
The ASB of the FRC and the EFRAG published recommendations aimed at improving the way in which accounting standard setters develop and implement standards. The proposals call on standard setters to improve their due process from start to finish by considering the effects of accounting standards.
The Discussion Paper ‘Considering the Effects of Accounting Standards’ has been published as part of the European proactive agenda for stimulating the global accounting debate and influencing the direction of IFRS. The intention is to encourage discussion of the issues set out in the DP and to use feedback from the consultation process to assess support for the proposals and enhance them, so that they can form the basis of possible improvements to the IASB’s due process.
The issue of whether and how standard setters should take account of the wider effects, or consequences, of the accounting standards they develop has been a subject of debate for decades, without satisfactory resolution. The issue has received more attention in recent years with public policy makers around the world increasingly challenging the lack of evidence to support new accounting standards and to assess the effectiveness of those that have been implemented. This has led to the inclusion of a requirement for an analysis of the anticipated effects of a new IFRS or a major amendment to an IFRS in the ‘Due Process Handbook for the IASB’ (October 2008 version). Whilst acknowledging the progress that has been made by the IASB, the challenge remains as to how to best implement that requirement systematically in their due process. The Discussion Paper is an important step in addressing that challenge.
The Discussion Paper is open for comment until 31 August 2011.
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