The IFRS Foundation’s Due Process Oversight Committee (DPOC) received a letter from two organizations, expressing concerns that the IFRS Interpretations Committee’s agenda decisions are placing an extra burden on businesses, according to recent discussions.
The letter said that the Interpretations Committee’s published agenda decisions “risk eroding the IASB’s principle-based system and place an increasing burden on stakeholders [to remain updated],” the DPOC said in an Aug. 3, 2023, summary.
In response to a Thomson Reuters query about the letter, an IFRS Foundation spokesperson on Aug. 8, 2023, in an email said “the organisations which wrote the letter have asked for it to be dealt with privately. Therefore I cannot add any further detail to what was published in the July Due Process Oversight Committee summary and the meeting recording.”
At the July DPOC meeting, IFRS Foundation Trustee Vice-Chair Teresa Ko said the letter was sent to her, Trustee Chair Erkki Liikanen, IASB Chair Andreas Barckow, and Interpretations Committee Chair Bruce Mackenzie “together with some other organizations.”
Ko said the “letter is not in the public domain because it is not a letter alleging any breach of due process so it is not needed to be dealt with under the DPOC protocol for dealing with letters.” The letter was discussed with Barckow, Mackenzie and “the DPOC had also considered a letter and a formal response which shortly will be sent to the address of the letter,” she said.
Further, “soon after the letter had been received, the IASB Chair engaged with one of the signatories of the letter and I think there are also plans to visit stakeholders to discuss content of the letter further.”
No other related correspondence has been received that requires its attention, the DPOC noted at the July meeting.
The Interpretations Committee is made up of 15 members who understand IFRSs, including financial statement preparers, auditors and users. Regulators also participate in committee discussions.
The primary role of the committee is to support the IASB in the consistent application of IFRSs which are principles-based and require judgment about how to apply the requirements when companies report on their transactions. The committee is able to set its own agenda, publishes interpretative responses to questions about specific accounting standards, and suggests further standard-setting to the IASB – if needed – on a topic.
The DPOC has made some important enhancements to the Due Process Handbook in 2020 relating to agenda decisions following a public consultation, however, the July meeting revealed that “there may be aspects of the due process that could potentially be examined in the planned review of the Handbook if any suggestions for improvement are identified.”
The role of the Interpretations Committee was recently raised with interest in the U.S., with some noting to the FASB that the Emerging Issues Task Force (EITF), a similar panel, should be leveraged to mimic that of the committee’s work with the IASB.
The suggestion was to leverage the EITF but with boundaries that stop short of giving the unit too much clout. Similar remarks were also raised in response to the FASB’s agenda consultation outreach efforts about a year ago. (See Leverage Special Task Force for Interpreting Accounting Issues but Don’t go Back to Old Days, FASB Advisers Say in the March 13, 2023, edition of Accounting & Compliance Alert.)
This article originally appeared in the August 9, 2023 edition of Accounting & Compliance Alert, available on Checkpoint.
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