Post-implementation reviews

Date recorded:

The Trustees added post-implementation reviews (PIRs) as a mandatory step to the IASB’s due process requirements in 2007 (for major projects and amendments to IFRSs). At that time, there was some controversy over the introduction of IFRS 8 Operating Segments. The Due Process Handbook notes that the PIRs would normally be limited to important issues identified as contentious during the development of the pronouncement and to consideration of any unexpected costs or implementation problems encountered. The handbook also states that the PIR should take place two years after the mandatory effective date.

The staff have been developing and refining the Board’s approach to PIRs. The first PIR will focus on IFRS 8 Operating Segments, which was issued by the IASB in 2006 and became effective on 1 January 2009 (this is the first of the Board’s standards to be subject to a PIR).

As part of the consultations undertaken by the IASB in developing the PIR process, it noted concerns raised by some constituents that limiting the scope of the PIR to contentious issues and considerations of implementation issues and unexpected costs would prevent the Board from undertaking a broader review of a new requirement. Many stakeholders asked the Board to also consider the effectiveness of the IFRS.

The staff noted that the purpose of a PIR is not to revisit all of the decisions made and issues raised when the new IFRS was developed. However, the staff noted that the goal of improving financial reporting underlies any new standard and concerns about the quality of a new standard should be considered as part of the PIR process. As this objective goes beyond is required by the Due Process Handbook, the staff have included this objective in the PIR of IFRS 8.

The Board tentatively agreed with the staff’s proposal to extend the scope of the PIR of IFRS 8 to include the effectiveness of the standard (i.e., has the IASB achieved what it intended to achieve by issuing IFRS 8). Several Board members expressed concern whether two years was a sufficient period of time to prepare an effectiveness review or whether it was more practical to do this review in five years. A few Board members also asked for clarification on what effectiveness meant. A few Board members expressed concern as to whether this might reopen the Standard. However, the staff noted that any issues raised would be either addressed by the IFRS Interpretations Committee (IFRIC or the Committee) or as part of the Agenda Consultation process. To address the Board’s concerns, the staff noted that it intends to assess the effectiveness aspect of the PIR to consider whether, and to what extent, this should become part of the Board’s standard approach to PIRs.

The Board tentatively agreed with the staff’s proposal to increase the transparency of data collection by including the issues for investigation in a Request for Views (RFV) for public comment. Several of the Board members noted that the questions might need to differ for users versus preparers.

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