6.2 Proposals to revise/update existing standards and recommendations to issue new ones (Discussions Papers and Exposure drafts)

When proposing revisions or updates to existing accounting standards or recommending the issuance of new ones, standard-setting bodies follow a process that involves issuing discussion papers and exposure drafts. These documents serve as avenues for public consultation and feedback. Here’s an overview of the proposals and recommendations process:

1. Identification of the Need for Revision or New Standards:
   • Standard-setting bodies, such as the International Accounting Standards Board (IASB) or Financial Accounting Standards Board (FASB), identify areas where existing standards need revision due to emerging issues, changes in business practices, or developments in accounting theory.
   • They also consider the need for new standards to address gaps in existing guidance or to provide specific guidance for complex transactions or industries.
2. Development of Discussion Papers:
   • Discussion papers are prepared to outline the issues, challenges, and alternative approaches related to the proposed revisions or new standards.
   • The papers provide a comprehensive analysis of the problem, potential solutions, and their implications on financial reporting.
3. Issuance of Discussion Papers:
   • Standard-setting bodies issue the discussion papers for public consultation and invite interested parties to provide feedback and input.
   • The papers are widely disseminated to stakeholders, including preparers, auditors, users, regulators, and professional bodies.
4. Public Consultation and Feedback:
   • Interested parties review the discussion papers and provide comments, suggestions, and concerns.
   • Stakeholders can submit their feedback in writing or participate in public hearings, roundtable discussions, or consultation forums organized by the standard-setting bodies.
5. Analysis of Feedback and Recommendations:
   • Standard-setting bodies analyze the feedback received during the consultation process.
   • They evaluate the feasibility, technical merits, and potential impacts of the proposed revisions or new standards.
6. Development of Exposure Drafts:
   • Based on the analysis of feedback, standard-setting bodies draft exposure drafts that incorporate changes, revisions, or new standards.
   • Exposure drafts include the proposed accounting requirements, disclosure requirements, implementation guidance, and effective dates.
7. Issuance of Exposure Drafts:
   • Exposure drafts are released for public exposure and further consultation.
   • Stakeholders are invited to review and provide comments on the specific proposals outlined in the exposure drafts.
8. Public Comment Period:
   • A defined period is provided for stakeholders to submit their written comments and feedback on the exposure drafts.
   • Standard-setting bodies may also conduct public hearings or workshops to gather additional input.
9. Analysis of Feedback and Finalization:
   • The comments and feedback received during the public comment period are thoroughly analyzed and considered by the standard-setting bodies.
   • Revisions, modifications, or further enhancements may be made based on the feedback to improve the proposed standards.
10. Publication of Revised Standards or New Standards:

• The final revised standards or new standards are published, incorporating the changes and improvements resulting from the consultation process.
• These standards are then officially adopted and implemented by jurisdictions, regulatory bodies, or accounting boards.