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National standard-setters discuss consistent application

  • IFASS (International Forum of Accounting Standard Setters) (dark green) Image

03 Mar 2017

The International Forum of Accounting Standard Setters (IFASS) met in Taipei on 2 and 3 March 2017. One of the core topics of the meeting was consistent application of IFRSs across jurisdictions, including the meaning of "consistent application" and what the IASB and the national standard-setters can do to support it.

The topic was introduced by the IFASS Chair Liesel Knorr. She focused on the work of the IFRS Interpretations Committee (as pars pro toto of the IASB's work) and its role within consistent application. She noted that according to the Due Process Handbook the role of the Committee was to address issues that have widespread and/or material effect. As examples she mentioned negative agenda decisions from the November 2016 IFRIC Update. For the strategy discussion Ms Knorr pointed out that "widespread" as well as "material" could have a local meaning as well as an international one and brought up the question of what the role of the standard-setters should be in case of negative agenda decisions even though the issue was widespread or material at least in some jurisdictions. In the context of consistency, should they conclude that the IFRS IC accepted diversity in practice? Also, should they enforce the opinions reflected in negative agenda decisions? Overarching the whole discussion was the question of what constitutes consistency - identical treatment or comparable results?

The issue was discussed in small groups and afterwards the results were presented and discussed in the plenum. The main messages that emerged from the discussion were:

  • General results:
    IFRS are principles-based, therefore consistent does not mean identical, rather, identical treatment is a significant feature of a rules-based system;
  • Users have a tolerance for different readings of the same principles as long as there are sufficient disclosures, however, application of the same principle with different results that leads to different investor decisions might point at a problem and should be raised;
  • Within an entity consistency should come with the meaning of "identical treatment";
  • Consistency cannot be achieved by the IASB and/or the national standard-setters alone, it is the result of the IASB, the national standard-setters, the regulators, the auditors, and the preparers interacting;
  • It is important to draw clear lines between education, implementation, and interpretation.

National standard-setters:

  • National standard-setters can raise gaps or inconsistencies within standards with the IASB;
  • Local interpretation should be kept to an utmost minimum, however, it would be better to work with the national regulators than letting them issue interpretations on their own;
  • Field testing is an important role of standard-setters and can help identify possible jurisdictional issues;
  • Raising awareness is an important role of standard-setters, especially for entities that don't have the resources for following developments closely;
  • National standard-setters should be the gate keepers for submitting issues to IFRS IC.


  • The IASB and the IFRIC should come out more quickly with results, keeping a balance between timeliness and quality;
  • The practice of moving issues back and forth between the IASB and IFRS IC should be discontinued;
  • The IFRS IC should meet more frequently;
  • If the Committee thinks that a problem is not widespread it should publish the data supporting this assessment;
  • Agenda rejections should be clearer, sometimes just limiting options can already be helpful;
  • As agenda decisions do not contain transition guidance, they can be difficult to apply.


  • IFASS is not an interpretative body;
  • IFASS meetings will continue to offer a slot for discussing issues identified by individual standard-setters;
  • In addition to the meetings, IFASS should find ways to communicate more often, maybe by teleconference or by written exchange.

The two major unanimous conclusions that "consistent" does not mean "identical" and that local interpretations are not desirable led to the question of how to take the topic further. In addition to communicating the results and the recommendations regarding the IASB's work to the IASB (that was represented at the meeting by Vice IASB Chair and IFRS Interpretation Committee Chair Sue Lloyd), the IFASS agreed to set up structures for collecting issues identified by the standard-setters, possibly by means of a database, if possible joined with or related to the IASB's inquiry database, so that standard-setters can see whether issues they identify have already been encountered in other jurisdictions and/or raised with the IASB. The group will also look into possibilities of communicating between meetings. A small working group will develop possible solutions and introduce them to IFASS at the fall meeting.

At a later point during the meeting, the IASB representative replied by acknowledging that the discussion had provided valuable insights and that the IASB would definitely try to take them on board in its work. She also noted that there seemed to be the perception that the IFRS IC was not very active, therefore she presented statistics that showed that in 2016 the Committee had discussed 33 issues, 25 of which had been addressed (addressed issues include negative agenda decisions). The IASB also outlined intended improvements to existing processes especially in the area of communication and noted that it encourages the discussion of practice issues among national standard-setters.

The above summary is based on our observer notes from the meeting. The IFASS will provide a summary of all topics discussed at the meeting in due course.

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