Third agenda consultation

Date recorded:

Cover paper (Agenda Paper 24)

The purpose of this meeting is to provide the summary of feedback from comment letters, the online survey and outreach on Question 4 of the Request for Information (RFI), which asked respondents for any other comments on the IASB’s activities and work plan and finalise the criteria for assessing the priority of financial reporting issues that could be added to the IASB’s work plan.

Feedback summary—Other comments (Agenda Paper 24A)

Many respondents commented on projects on the current work plan. Some also made general comments about the work plan and expressed mixed views. Some said the Board should firstly finalise the projects currently on its work plan, as these projects were identified as priorities by stakeholders in the 2015 Agenda Consultation, and continue working on post-implementation reviews, as required by the Due Process Handbook. Some said the Board should reassess the priority and necessity of projects on its current work plan and determine whether any of those projects should be put on hold or even stopped to free up resources for new, more important projects. Some respondents wanted to pause or discontinue some projects on the current work plan because:

  • The issues addressed in the project are not pervasive
  • The projects have made little progress or may not result in significant improvements in financial reporting
  • The projects have lower priority than other potential projects.

Some respondents also made a range of other comments about the Board’s activities and work plan.

The Board was asked for comments or questions on the feedback discussed in the paper.

Board discussion

Board members noted that much of the feedback on the workplan is consistent with what the Board is already doing. The Vice Chair noted that even for those projects where constituents said that the Board needs to do more, the Board already held meetings on some of them and the feedback was therefore out of date (e.g. Dynamic Risk Management).

One Board member said that it may be worthwhile for the staff to do an assessment of projects that have been dormant for a long time to determine whether they should be continued or stopped. A fellow Board member supported this, saying that given he joined the Board only recently, he is unfamiliar with some of those projects and it would be good to have a session on these projects to bring all Board members on the same information level.

With regard to Management Commentary, one Board member suggested that the project be brought back to the Board to decide whether this will stay on the IASB workplan or will move to the ISSB workplan.

No decisions were made on this paper.

Criteria for assessing the priority of financial reporting issues to be added to the work plan (Agenda Paper 24B)

One of the objectives of the agenda consultation is to gather stakeholders’ views on the criteria for assessing the priority of financial reporting issues that could be added to the Board’s work plan. The RFI proposed that the Board evaluates a potential project for inclusion in its work plan primarily by assessing whether the project will meet investors’ needs, while taking into account the costs of producing the information. In addition, the RFI set out seven criteria that the Board proposes to use in deciding whether to add a potential project to its work plan:

  • The importance of the matter to investors
  • Whether there is any deficiency in the way companies report the type of transaction or activity in financial reports
  • The type of companies that the matter is likely to affect, including whether the matter is more prevalent in some jurisdictions than others
  • How pervasive or acute the matter is likely to be for companies
  • The potential project’s interaction with other projects on the work plan
  • The complexity and feasibility of the potential project and its solutions
  • The capacity of the Board and its stakeholders to make timely progress on the potential project

Most respondents provided feedback on this aspect of the agenda consultation. Of those respondents, almost all agreed with the criteria proposed by the Board. Many said the criteria are well-balanced and adequate. Many respondents who commented did not express any concerns about the criteria. Some respondents suggested the Board split the criteria into essential and secondary criteria—for example, some said the importance of the matter to users should be given the highest weight, whereas some others said the priority of any project should depend on its urgency and relevance. A few other respondents suggested the Board rank the criteria—for example, rank the first four criteria as the primary criteria and the three other, more practical criteria, as secondary (confirmatory) criteria.

Staff recommendation

The staff recommended proceeding with the criteria as proposed in the RFI without any additions to the list of criteria.

Board discussion

There was some discussion around the focus of the criteria on investors’ needs. One Board member said that the focus should not be limited to investors but should also include preparers and other stakeholders. As a result, the projects retained on the agenda should be those that benefit most stakeholders and not only investors.

One Board member said that the Board should not overengineer the criteria as resources are limited. This was echoed by the Chairman who said that the criteria should more be seen as considerations, rather than criteria to avoid that the Board will be held against the criteria and therefore constrain itself. It was agreed that the criteria should not be added to the IFRS Foundation’s Due Process Handbook.

With regard to the criterion of whether a requirement inspires non-GAAP measures, one Board member said that this does not necessarily mean the requirement is flawed. It could be that the entity would like to give different perspectives on a figure.

Board decision

11 of the 12 Board members supported the staff recommendation to proceed with the criteria as proposed in the RFI.

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