How the IFRS Interpretations Committee helps implementation
The IFRS Interpretations Committee (Interpretations Committee) works with the International Accounting Standards Board (Board) in supporting the application of IFRS® Standards.
Interpretations Committee process
All Interpretations Committee projects begin as a submission. The process is designed to:
- allow any stakeholder to submit a matter for consideration (see ‘Submit an enquiry to the Interpretations Committee’ below); and
- be transparent—all eligible submissions are considered at a public meeting.
The Interpretations Committee then decides whether to recommend standard-setting to address the matter in the submission. The Interpretations Committee may decide not to do so if it concludes that standard-setting would be:
- unnecessary—typically because, in the Interpretations Committee’s view, IFRS Standards provide an adequate basis for a company to determine its accounting or because there is no evidence that a widespread accounting problem exists; or
- not sufficiently narrow in scope—the question could be resolved only as part of a larger Board project (not a narrow-scope project).
To explain why it did not recommend standard-setting, the Interpretations Committee publishes an agenda decision to report its decision, which may include explanatory material.
The following diagram summarises the criteria the Interpretations Committee considers when deciding whether to recommend standard-setting:
Explanatory material in agenda decisions
Agenda decisions often include information to help companies applying IFRS Standards. They do so by explaining how the applicable principles and requirements in the Standards apply to the question submitted. The objective of including explanatory material in Agenda Decisions is to improve consistency in the application of the Standards.
Agenda decisions are subject to due process. They are open for comment for 60 days and, before finalising, the Interpretations Committee considers comments.
Agenda decisions published by the Interpretations Committee can be found here.
Narrow-scope standard-setting
Some questions result in narrow-scope standard-setting that follows the applicable due process. The Interpretations Committee may decide to:
- develop an IFRIC Interpretation of a Standard—this adds to the requirements in a Standard without changing the Standard itself; or
- recommend a narrow-scope amendment to a Standard.
Narrow-scope standard-setting projects recommended by the Committee and approved by the Board are added to the Board’s work plan as maintenance projects.
Agenda decisions
The Interpretations Committee may decide not to recommend standard-setting. This might be because the Interpretations Committee concludes that standard-setting is:
- unnecessary—typically because, in the Interpretations Committee’s view, IFRS Standards and IFRIC® Interpretations provide enough information for a company to determine its accounting or because there is no evidence that a widespread accounting problem exists; or
- unhelpful—for example, introducing new or amended requirements might assist one company with a particular type of transaction, while raising questions for other companies with slightly different types of transactions.
To explain why it did not recommend standard-setting, the Interpretations Committee publishes an agenda decision. Agenda decisions are subject to due process. They are open for comment for 60 days and, before finalising, the Interpretations Committee considers comments.
Agenda decisions often include information to help companies applying IFRS Standards. They do so by explaining how the applicable principles and requirements in the Standards apply to the question submitted.
All agenda decisions issued by the Interpretations Committee are listed below. If you would prefer to see agenda decisions attached to their relevant Standards, click here.
Narrow-scope standard-setting
Some questions result in narrow-scope standard-setting that follows the normal due process. The Interpretations Committee may decide to:
- develop an IFRIC Interpretation of a Standard—this adds to the requirements in a Standard without changing the Standard itself; or
- recommend a narrow-scope amendment to a Standard.
Any individual or organisation may put forward suggestions of potential agenda items for consideration by the Interpretations Committee. In considering whether to put forward suggestions, all parties should consult the ‘Identification of Matters’ section (paragraphs 5.14 to 5.22) of the IASB and IFRS IC Due Process Handbook.
Anyone doing so is asked to submit a brief proposal, which will be presented to the Interpretations Committee without identifying the submitter.
The proposal should include the following:
- The issue: A description of the issue including, where relevant, any aspects that should be addressed separately.
- Current practice: A brief description of current or emerging accounting practices, outlining the major alternatives, and referring to the relevant requirements in IFRS Standards.
- Reasons for the Interpretations Committee to address the issue: The issue should be evaluated using the following criteria:
- Is the issue widespread and has, or is expected to have, a material effect on those affected?
- Would financial reporting be improved through the elimination, or reduction, of diverse reporting methods?
- Can the issue be resolved efficiently within the confines of IFRS Standards and the Conceptual Framework for Financial Reporting?
- Is the issue sufficiently narrow in scope that the Interpretations Committee can address this issue in an efficient manner, but not so narrow that it is not cost-effective for the Interpretations Committee to undertake the due process that would be required when making changes to IFRS Standards?
Will the solution developed by the Interpretations Committee be effective for a reasonable time period? The Interpretations Committee will not add an item to its agenda if the issue is being addressed in a forthcoming Standard and/or if a short-term improvement is not justified.
Please submit your suggestion by email to ifric@ifrs.org
You can also post your suggestion to:
IFRS Interpretations Committee
IFRS Foundation
Columbus Building
7 Westferry Circus
London
E14 4HD
