Global Standards for the world economy

Monday 01 March 2021

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Interpretations process

Development of minor or narrow-scope amendments to Standards

Minor or narrow-scope amendments to Standards, including Annual Improvements, do not need to follow the IASB’s formal consultation process with its IFRS Advisory Council (the ‘Advisory Council’), its Accounting Standards Advisory Forum and accounting standard-setting bodies on proposed agenda items before being added to the Standards-levels programme, because such amendments are part of the implementation or maintenance of Standards. However, the Advisory Council should be informed of any proposed additions of minor or narrow scope amendments to the Standards-level programme.

In the case of minor or narrow-scope amendments to Standards, the IASB considers developing an Exposure Draft, in line with the process detailed for developing a Standard. In other cases, the IASB may seek the assistance of the Interpretations Committee in developing an amendment to a Standard, drawing on their implementation experience. This is the case, for example, in the Annual Improvements process, in which the IASB seeks the assistance of the Interpretations Committee when following the process for exposing annual improvements.

Exposing annual improvements

Some proposed amendments to Standards or Interpretations that are sufficiently minor or narrow in scope can be packaged together and exposed in one document even though the amendments are unrelated. Such amendments are called Annual Improvements. Annual Improvements follow the same due process as other amendments to Standards.

The justification for exposing unrelated improvements in one package is that such amendments are limited to changes that either clarify the wording in a Standard or correct relatively minor unintended consequences, oversights or conflicts between existing requirements of Standards. Because of their nature, it is not necessary to undertake consultation or outreach for Annual Improvements beyond the comment letter process. The IASB needs to be cautious and avoid including in the Annual Improvements package an amendment that merits separate consultation and outreach.

Clarifying a Standard involves either replacing unclear wording in existing Standards or providing guidance when an absence of guidance is causing concern. Such an amendment maintains consistency with the existing principles within the applicable Standard and does not propose a new principle or change an existing principle.

Resolving a conflict between existing requirements of Standards includes addressing oversights or relatively minor unintended consequences that have arisen as a result of the existing requirements of Standards. Such amendments do not propose a new principle or change to an existing principle.

Proposed Annual Improvements should be well defined and narrow in scope. The IASB assesses proposed Annual Improvements against the criteria previously mentioned before they are published in an Exposure Draft. As a guide, if the IASB takes several meetings to reach a conclusion, it is an indication that the cause of the issue is more fundamental than one that can be resolved within the Annual Improvements process.

The IASB normally allows a minimum period of 90 days for comment on Annual Improvements.