Considering the effects of accounting standards - Discussion Paper, January 2011
01.02.2011
The purpose of the discussion paper is to stimulate debate on the issues presented. The paper is issued by the UK standard setter, the Accounting Standards Board (ASB), and the European Financial Reporting Advisory Group (EFRAG). EFRAG does not formulate preliminary views at this stage of the due process.
The issue of this paper is also supported by the following standard setters in Europe:
OIC – Organismo Italiano di Contabilità (Italy)
DRSC – Deutsches Rechnungslegungs Standards Committee (Germany)
RJ - Raad voor de Jaarverslaggeving (Netherlands)
KSR- Komitet Standardów Rachungkowości (Poland)
ICAC - Instituto de Contabilidad y Auditoría de Cuentas (Spain)
PURPOSE AND SUMMARY OF THIS DISCUSSION PAPER
Purpose of this discussion paper
1 The issue of whether accounting standard setters should take account of the effects, or consequences, of the standards they develop has been a subject of debate for decades, although without satisfactory resolution. As explained in Section 1, the issue has become more prominent in recent years and the requirement for an analysis of the anticipated effects of a new International Financial Reporting Standard (IFRS) or a major amendment to an IFRS is now included in the "Due Process Handbook for the IASB". Whilst acknowledging the progress that has been made, there remains pressure from some quarters for the International Accounting Standards Board (IASB), and other national standard setters, to further develop and formalise the role of effects analysis as a mandatory part of its due process.
2 The purpose of this paper is to put forward, for public comment, proposals to integrate (or further embed) into the standard setting due process a systematic process for considering the effects of accounting standards as those standards are developed and implemented. The intention is to stimulate discussion and to use the consultation process to assess support for the proposals, with a view to then assisting the IASB in implementing the proposals within its due process.
3 This paper is concerned primarily with the due process of the IASB, but the content of this paper will also be relevant to national standard setters.
Executive summary
4 The content of this paper is as follows:
Section 1 provides background information;
Section 2 explores the process of "effects analysis";
Section 3 explores the concept of "effects";
Section 4 considers the key principles underpinning effects analysis;
Section 5 considers the practicalities of performing effects analysis; and
Section 6 contemplates next steps.
