The Board agreed with the following 4 step approach:

Step 1: Extract from all existing IFRS and Interpretations the basic principles in those standards. This is likely to include many of the principles in the 'black letter' paragraphs of those standards, plus key elements of the Framework, plus some principles in IASB and IFRIC EDs that have not yet been finalised.

Step 2: Reorganise these topically (perhaps financial statement order) if it is concluded that this makes the presentation of the principles more user friendly.

Step 3: Review these for principles or guidance that had been omitted in the original Step 1 extraction but that, on review, are deemed to be essential to operationalise the standards for SMEs and add these to the principles extracted in Step 1.

Step 4: Review the results of Step 3 with a view to identifying helpful simplifications for SMEs. Present those potential simplifications to the Advisory Group and the Board for deliberation.

The key issues to be addressed by the Board at future meetings:

• Specific definition of entities included in the scope of the project.
• Whether the special guidance for SMEs should be promulgated (i) as separate sections in or blanket exemptions from individual IFRS or (ii) in a separate volume of standards.
• Which specific differences and simplifications.
• How to describe (label) the body of standards in the basis of presentation note and, presumably, in the auditor's report.

The target is to have at least some of the simplifications and/or guidance issued for public comment by June 2004 and approved by the Board by December 2004.