ASB and EFRAG issue a Discussion Paper: 'Considering the effects of Accounting Standards'
News types: Consultation Announcement
Published: 31 January 2011
ASB PN 359
The Accounting Standards Board (ASB) of the FRC and the European Financial Reporting Advisory Group (EFRAG) have today 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. These proposals are aimed at strengthening that process and enhancing its transparency, to increase the accountability and credibility of the standard setter, and thus to contribute positively to delivering improved financial reporting.
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 International Financial Reporting Standards (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 International Accounting Standards Board’s (IASB) 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.
Notes to Editors
The Accounting Standards Board (ASB) of the FRC and the European Financial Reporting Advisory Group (EFRAG) have today 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. These proposals are aimed at strengthening that process and enhancing its transparency, to increase the accountability and credibility of the standard setter, and thus to contribute positively to delivering improved financial reporting.
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 International Financial Reporting Standards (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 International Accounting Standards Board’s (IASB) 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.
Notes to Editors
- The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
- The role of the ASB is to oversee the financial reporting requirements for UK entities. This is done by maintaining and improving UK Financial Reporting Standards (FRS) and influencing the development of international standards. The ASB achieves this by collaborating with accounting standard-setters from other countries and the International Accounting Standards Board (IASB).
- The ASB has ten Board members, of whom two (the Chairman and the Technical Director) are full-time, and the remainder, who have a variety of experiences as preparers, auditors and users of financial reports, are part-time.
- EFRAG was set up principally for the purpose of providing proactive advice to the IASB, for advising the European Commission on the acceptability of IFRS for endorsement for use in Europe in the consolidated accounts of all listed companies, for stimulating, coordinating and carrying out proactive accounting activities, and for advising the European Commission on any resulting changes to be made to the accounting directives and related topics. EFRAG website: www.efrag.org.