The Due Process Oversight Committee (DPOC) is proposing to amend the IFRS Foundation Due Process Handbook (‘the Handbook’) to reflect the creation of the International Sustainability Standards Board (ISSB) and to enhance and clarify the IFRS Foundation’s due process. The objective of the Handbook is to ensure that the standard-setting process is transparent, inclusive, and accountable.

CA ANZ and CPA Australia have lodged a joint submission responding to the proposed amendments. While we support including the ISSB in the Handbook, we have emphasised that a unified conceptual framework addressing both financial and sustainability reporting is still required for true connectivity – noting the importance of first clearly defining the conceptual framework underpinning sustainability reporting.

The Exposure Draft (ED) also proposes what are described as ‘enhancements and clarifications’ to the Handbook that could potentially result in unforeseen consequences and reduced opportunities for stakeholder input on certain amendments to standards.

We raised the following key points:

• The proposed amendments formalise a post-implementation review (PIR) process that we believe has historically placed a disproportionate focus on identifying fatal flaws and cost inefficacies at the detriment of the IASB’s aim to work in the public interest. Under the current approach, most unanimous points raised in consultation are dismissed with the ambiguous reasoning that “the Standard is working as intended”. We recommended that this section is expanded to outline the circumstances under which specific application questions could indicate that a standard might not be functioning as intended.
• Replacing the fixed timeline for PIRs with an open-ended approach could result in unnecessary delays and overlooked issues. We have recommended the boards consider whether sufficient information is available after two years and where it is not, the PIR should not be delayed beyond a further three years, resulting in no PIR being delayed more than five years after a standard’s effective date.
• While we support renaming ‘annual improvements’ to ‘packages of minor improvements to the standards’ to remove misnomers, we do not support widening the scope to “minor or narrow-scope amendment that updates a requirement or updates material accompanying an IFRS Standard”, as such changes may have wider-reaching unintended consequences and if captured under this process, will be subject to a reduced 90-day consultation period limited to comment letters.
• We raise concerns around the lack of due process review for third-party materials published on the IFRS Foundation website. To uphold credibility and ensure consistency, we recommend that the IFRS Foundation take ultimate responsibility for reviewing and endorsing any third-party educational materials published on its website.
• To strengthen the effectiveness of the IFRS Interpretations Committee’s role, we recommend explicitly distinguishing and clarifying the purpose of agenda decisions, IFRIC interpretations, and SIC interpretations. Additionally, a process is necessary for assessing the continued relevance of older interpretations, especially given the rapid evolution of economic conditions.
• We highlight transparency concerns around certain consultative group meetings being permitted to be held in private and the absence of clear criteria outlining the circumstances under which such groups are formed. In addition, to enhance their effectiveness, we recommend that terms of reference are clearly defined, and key performance indicators (KPIs) are established so that the IASB/ISSB can assess the success of these groups.