Discussion papers and exposure drafts

Date recorded:

Discussion Papers and Exposure Drafts – Agenda paper 28

This paper considered the different purposes of Discussion Papers (DP) and Exposure Drafts (ED). This session was held in anticipation of the Board’s decisions about whether it should publish a DP or an ED for the projects on primary financial statements, goodwill and impairment as well as rate-regulated activities.

This was an education session and the Board was not asked to make any decisions.


The Board is not required to publish a DP before adding a standard-setting project to its agenda. Although a DP is generally issued before the start of a major standard-setting project, the Board might conclude that a DP is not necessary because it has sufficient input to proceed directly to an ED.

A DP is a high-level document setting out a comprehensive overview of the issue, possible approaches to addressing the issue and the Board’s preliminary views. On the other hand, an ED sets out details of the proposed amendments including a basis for conclusions and any dissenting views to the proposals.

The following factors should be considered when determining whether a DP or an ED should be issued:

  1. The stage of development

    At the idea generation phase of a project (e.g. a research project), the Board is still defining the problem and scope of the project and considering the possible approaches to address the issue. A DP is generally more appropriate as it conveys ideas and seeks feedback on the possible approaches.

    At the implementation phase of a project (e.g. a standard-setting project), the Board will have selected an approach, and is setting out its view of what the accounting requirements should be. Issuing an ED at this stage will seek feedback on specific proposed requirements. Ideally, the proposed requirements should be complete enough for the Board to issue a final Standard based on the ED.

  2. The significance of the change

    A DP is useful to ensure that the full range of views is captured, considered and acknowledged, leading to a common understanding of the foundation for future proposals. It is particularly useful when there is a range of answers or several interrelated issues to explore.

    In contrast, when the Board has already determined the approach it intends to pursue, and when that approach is generally understood and accepted by interested parties, an ED may be appropriate.

  3. The effect on timelines and stakeholder participation

    Although a DP and an ED both have a minimum comment period of 120 days, stakeholders tend to take an ED more seriously than a DP.

  4. The risk of re-exposure

    Issuing an ED prematurely increases the risk of re-exposure. This can happen when substantial issues emerge from feedback received on the ED which the Board has not previously considered.

    Furthermore, the Board’s ability to respond to feedback can be more limited for an ED compared to a DP. This is because an ED sets out the details of the Board’s preferred approach and the development of those details are constrained within the context of that approach. It would be difficult for the Board to modify the proposals fundamentally after the first exposure. Any subsequent feedback may also not reflect a balanced view because stakeholders lose interest in the protracted process.


The Vice-Chair observed that there seems to be a big gap between a DP (where the Board sets out its preliminary views on a variety of ideas) and an ED (which already sets out the contours of a future standard) and that is why the Board struggles with determining which document is more appropriate in certain circumstances.

In order to bridge that gap, she believed that the Board should develop a DP more fully before publishing it for comment. A Board member also observed that in order to pre-empt stakeholder reactions, the Board should explain in the Basis for Conclusions of an ED why it did not pursue certain alternatives to reduce the risk of re-exposure.

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