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Objective of the prioritisation framework

1. The objective of the IASB prioritisation framework is to facilitate prioritisation of individual technical projects between the holistic prioritisations conducted through the IASB’s five-yearly agenda consultations. The framework seeks to maximise the IASB’s contribution to the transparency, accountability and efficiency of capital markets around the world, given internal and external capacity constraints.

2. The prioritisation framework puts into practice the principles in the Due Process Handbook, enabling efficient analysis and consistent decision-making about potential new projects. It also facilitates clear communications about prioritisation decisions to stakeholders.

Overview of the standard-setting process

3. Every five years the IASB carries out an agenda consultation, as required by the Due Process Handbook.1 The agenda consultation provides an opportunity for the IASB to consider and consult on its priorities holistically, including the framework (criteria) to apply in setting those priorities. As part of the agenda consultation, the IASB may add new technical projects to its pipeline, which consists of inactive projects that the IASB commits to starting before the next agenda consultation. It may also remove projects from its work plan, which consists of projects that it is actively working on.

4. As part of the agenda consultation, the IASB also consults on the strategic direction and balance of its activities, including the balance between research and standard-setting and maintenance and consistent application activities. The IASB strives to maintain this balance throughout the period between agenda consultations.

5. During the period between agenda consultations, new projects may be added to the pipeline (or, if urgent, added directly to the work plan and started immediately) to respond to market developments. Typically, such projects will be maintenance and consistent application projects because the agenda consultation focuses on prioritising specific research and standard-setting projects, leaving maintenance and consistent application projects to be specified as the need arises. This approach allows the IASB to set aside capacity to work on smaller, faster projects in response to market developments. However, the IASB may also add research and standard-setting projects if evidence suggests a need to update decisions made during the agenda consultation.

6. Once a project is added to the work plan, the IASB gathers evidence about the problem to be solved and undertakes standard-setting to help resolve it. Upon completion of its work, the IASB issues amendments or a new IFRS Accounting Standard. Throughout this process, the IASB may decide to retire a project before issuing amendments. It might do so, for example, if work indicates that the problem is not as prevalent as the initial evidence suggested.

7. After issuing amendments or new IFRS Accounting Standards:

  1. the IASB or the IFRS Interpretations Committee (Committee) may receive questions about the application of IFRS Accounting Standards. Some of these questions might lead to new projects.
  2. the IASB carries out a post-implementation review (PIR) of major amendments and new IFRS Accounting Standards to assess whether the effects of applying those new requirements on users of financial statements, preparers, auditors and regulators are as intended when the IASB developed those requirements. Some of the IASB’s findings in the PIR may also lead to new projects.

Overview of the prioritisation framework

8. The prioritisation framework is focused on prioritisation decisions between agenda consultations. The five-yearly agenda consultations allow the IASB to consider and consult on its priorities holistically. They provide the IASB with the information it needs to make relative prioritisation decisions about existing and possible future technical projects. Between agenda consultations, however, the IASB must make ad hoc decisions about projects to add to or to remove from its work plan, without the benefit of a holistic consultation.

9. The IASB assesses the considerations in the prioritisation framework based on evidence that has arisen since the previous agenda consultation. The bigger the potential project, the greater the weight of evidence required to add a project.

10. The application of the prioritisation framework requires judgement; no individual consideration is determinative and IASB members may give greater weight to some considerations than to others.

11. The prioritisation framework consists of a base framework, with variations based on the nature of the prioritisation decision to be made and the type of project.

Base framework

12. The IASB’s prioritisation decisions depend on the extent of two main types of considerations: technical considerations and operational considerations.

13. Technical considerations are:

  1. pervasiveness—that is, how many entities are affected or expected to be affected by the matter. Projects related to requirements that are not broadly applied (or projects related to voluntary guidance) may thus rank lower in priority. In assessing pervasiveness, the IASB also considers the jurisdictions, entities and industries affected.
  2. effects—that is, whether the expected financial reporting benefits will exceed the costs of the requirements. The IASB considers effects primarily by assessing the needs of users of general purpose financial reports, while also taking into account the costs and benefits for other parties, including preparers of financial statements. In this regard, the IASB considers:
    1. the expected benefits from any change in requirements, such as more decision-useful (including comparable) information or reduced costs; and
    2. the expected initial and ongoing costs (financial and otherwise) resulting from any change in requirements.
  3. feasibility of standard-setting, given the standard-setting investment—that is, the resources and effort required to complete the project. These considerations include the feasibility of identifying the scope and developing solutions. Feasibility might change after a project has been added and research has been conducted, triggering re-assessment of prioritisation. Some matters might be highly feasible in terms of standard-setting with a low level of standard-setting investment required—and may, therefore, rank higher in priority. In contrast, matters involving high degrees of judgement or non-compliance might not have a standard-setting solution—no matter how much standard-setting investment is made—and may, therefore, rank lower in priority. As a project progresses through its life cycle, the IASB might also consider the amount of remaining standard-setting investment required to complete the project and the likelihood of a supermajority vote in favour of an exposure draft, a final amendment or a Standard.
  4. strategic priority—which could include considerations such as maintaining the principles-based nature of IFRS Accounting Standards, facilitating connectivity with the ISSB, maintaining convergence where previously achieved with US GAAP, facilitating digital reporting or improving understandability to improve application of IFRS Accounting Standards.

14. Operational considerations are:

  1. time-sensitivity—that is, the urgency of the need for an improvement to an IFRS Accounting Standard. Urgent projects are started immediately, effectively bypassing the pipeline. The time-sensitivity of a matter may be related to technical considerations such as pervasiveness and effect.
  2. project synergies—that is, whether the matter in question has synergies with other projects, including relevant research by other standard-setters and organisations that could expedite the IASB’s work.
  3. capacity—that is, whether internal and stakeholder capacity is available to meet project needs. Capacity also considers the strategic balance established during the agenda consultation for research and standard-setting versus maintenance and consistent application (see paragraph 4). If capacity is not available, the IASB will need to make relative prioritisation decisions—for example, to source capacity from active projects or delay the start of pipeline projects.
  4. effort—that is, if a project is paused, the effort involved in restarting it.

Variations on the base framework

15. The application of the base framework will depend on:

  1. the nature of the prioritisation decision; and
  2. the type of project.

Nature of prioritisation decision

16. Prioritisation decisions occur at four points throughout the standard-setting process:

  1. as part of the agenda consultation, at which time the IASB may decide to add new projects to the pipeline. The IASB may also decide to remove projects from its pipeline or work plan.
  2. after the agenda consultation, potential new projects may be identified through a variety of sources (see paragraph 23). At this point, the IASB must decide whether the project is of sufficient priority to add it to its pipeline. The Due Process Handbook requires that the IASB consult with the IFRS Advisory Council and the Accounting Standards Advisory Forum before adding major projects to the work plan if these projects were not contemplated in the previous agenda consultation.2
  3. during the period before the next agenda consultation, the IASB must decide when to start a pipeline project. The aim is to start pipeline projects before the next agenda consultation.
  4. at natural points within the lifecycle of an active project, such as after evaluating feedback on a consultation document. At these points the IASB might consider:
    1. changing the scope of the project;
    2. pausing the project (including possibly returning it to the pipeline); or
    3. retiring the project and removing it from the work plan.

17. As stated in paragraph 1, prioritisation decisions that are part of an agenda consultation (see paragraph 16(a)) are beyond the scope of this framework.

18. Prioritisation decisions about whether to add a project to the pipeline (see paragraph 16(b)) focus primarily on technical considerations. However, the pipeline consists of inactive projects that the IASB commits to starting before the next agenda consultation; it is not a waiting room for all technically important projects. Therefore, it might also be necessary to take into account operational considerations, for example:

  1. whether the project should be delayed to benefit from the holistic agenda consultation prioritisation process (that is, the time-sensitivity component of operational considerations); and
  2. whether capacity is available before the next agenda consultation, including how adding the project would affect the progress of other projects (that is, the capacity component of operational considerations).

19. Prioritisation decisions about when to start a pipeline project (see paragraph 16(c)) or pause an active project (see paragraph 16(d)(ii)) focus primarily on operational considerations.

20. Prioritisation decisions about changing the scope of a project (see paragraph 16(d)(i)) involve determining both whether to make the change and when to implement it.

21. Prioritisation decisions about whether to retire an active project (see paragraph 16(d)(iii)) focus primarily on technical considerations.

22. The prioritisation framework distinguishes between paused projects and retired projects because projects are normally retired based on technical considerations; consequently, even if there is demand for the project in the future, the IASB would not have a basis to undertake such a project unless new technical information is available. In contrast, a paused project may be restarted in the future when operational considerations are more favourable.

Type of project

23. Projects arise from several sources:

  1. the five-yearly agenda consultation;
  2. required projects—that is, PIRs required by the Due Process Handbook and periodic comprehensive reviews of the IFRS for SMEs Accounting Standard;
  3. evidence from PIRs about the need for standard-setting;
  4. recommendations from the Committee or actions in response to findings from the Committee’s work; and
  5. horizon-scanning activities, through which IASB members and staff monitor emerging issues through research and stakeholder engagement.

24. The prioritisation considerations for required projects (see paragraph 23(b)) and projects arising from PIRs (see paragraph 23(c)) differ from the base prioritisation considerations. Specifically:

  1. for required projects:
    1. no decision about whether to add or retire these projects is necessary because these projects are required; and
    2. decisions about when to start these projects have additional considerations (see IASB post-implementation reviews for PIRs and paragraph BC77 of the IFRS for SMEs Accounting Standard Third Edition); and
  2. for projects arising from PIRs, decisions about whether to add a project and when to start it are currently based on the PIR prioritisation framework, although the IASB might consider aligning such decisions with this prioritisation framework in future.

1 See paragraphs 4.3-4.5.
2 See paragraph 4.6.