Question

Describe the standard setting process that the IASB goes through and evaluate its effectiveness.

Answer 1

The standard setting process of the IASB for issuing IFRSs has six stages. The six stages are:

1. The IASB considers the relevance and reliability of the information that could be provided, the existing guidance (if any), the potential for enhanced convergence of accounting practice and the quality of the standard to be developed and any resource constraints.

2. The IASB decides whether it should undertake the project by itself or jointly with another standard setter such as the Financial Accounting Standards Board (FASB).

3. The IASB may issue a discussion paper; however, this is not mandatory.

4. The IASB must issue an ED. This is a mandatory step.

5. The IASB may re-expose an ED, particularly where there are major changes since the ED was first released in stage 4.

6. The IASB may hold regular meetings with interested parties, including other standard-setting bodies, to help understand unanticipated issues related to the practical implementation and potential impact of the IFRS. They also carry out post-implementation reviews of each new IFRS.

The IASB has full discretion over its technical agenda and over the assignment of projects, potentially to national standard setters. In preparing the IFRSs, the IASB has complete responsibility for all technical matters including the preparation and issuance of standards and exposure drafts, including any dissenting opinions on these, as well as final approval of interpretations developed by the IFRS Interpretations Committee.

IASB meetings are normally held every month and last between three and five days. The meetings are open to the public. Interested parties can attend the meetings in person, or may listen and view the meeting via the IASB webcast. Subsequent to each meeting, the decisions are summarised in the form of a publication called IASB Update which is available on the IASB website.