Monday 16 December 2019

THE STANDARD-SETTING PROCESS BY STANDARD SETTING BOARD

DUE PROCESS OVERSIGHT

Standards are developed by Standard Setting Boards (SSBs).

When a standard project is ready, it is subject to public consultation to elicit comments from stakeholders that are affected by the standards globally (investors, regulators, the public at large).

PIOB’s oversight is applied throughout the whole process of standard development to ensure standards are in the public interest.

A standard may take over two years to be developed and approved.

PIOB staff:

  • (i) reviews the draft standard developed by the standard setting board and the documents distributed for each SSB meeting,
  • (ii) reviews all the public commentary offered during the consultation process of each standard project;
  • (iii) identifies the public interest issues within the project, that is, those issues within the standard project that either affect its quality or have an impact on different stakeholders; and
  • (iv) prepares a Briefing memo (BM) for the PIOB Board member who observes the SSB meeting.
  • During each SSB meeting, the PIOB observer raises the public interest aspects that affect the standard. After the SSB Meeting, the observer prepares an Observation Memo (OM). On the basis of the Briefing Memo, the SSB discussion and the Observation Memo, staff identifies the main Public Interest Issues, which are discussed at the four PIOB Board meetings.

    PIOB staff prepares and updates the Public Interest issues pertaining to each standard under development on a quarterly basis, communicates the list of issues to the SSBs and CAG Chairs, publishes and keeps updating the document in the PIOB website. The public interest issues and the recommendations provided by the PIOB are also included in the PIOB annual report.

    The oversight activity includes monitoring of comment letters of respondents to Exposure Drafts (Eds) and the maintenance of a database with the concerns raised by MG Members and other stakeholders on the main IAASB and IESBA projects.

    When a standard is finalized and approved by the relevant SSB, PIOB staff conducts an Analysis of Responsiveness to the Public Interest, to conclude on the standard and help the PIOB determine whether to approve the standard. This is an analysis on the due process followed, on the specific public interest issues raised during the development of the standard and how they were addressed, on the qualitative characteristics which the standard need to possess (scope, completeness, timelines, comprehensiveness, coherence, and consistency, understandability and enforceability).

    SSB'S STRATEGIES AND WORK PROGRAMS

    SSBs' strategies and work programs of the standard-setting boards (International Auditing and Assurance Standards Board {IAASB}, International Accounting Education Standards Board {IAESB}, and the International Ethics Standards Board for Accountants {IESBA}) helps to ensure that their work is focused on the needs of users of accountancy services.

    Each Standard-setting Board periodically develops and approves a strategy and work program. Usually, strategies cover a 3-year period of time.These agendas largely condition those of their respective CAGs. This is why these documents are of high importance.

    Consultation of a strategy includes two steps:

  • (i) a formal survey of key stakeholders to obtain views about issues that they believe should be addressed by the Boards in the immediate future; and
  • (ii) a consultation paper (equivalent to an ED) for comments by the general public, placed on IFAC's website for no less than 60 days. Occasionally, Standard-setting Boards hold global round tables.
  • In addition to signing off on the due process followed by a Standard-setting Board in the development of a strategy, the PIOB is also requested to sign off on the completeness of the work program from a public interest perspective

    The PIOB, in its oversight of the development of Board strategies and work programs, has the responsibility to determine whether strategic plans are complete. It also has the right to ask that particular projects be included in the plan, and is required to consider the priority given to the projects in the strategies. These factors imply a wider oversight than is the case with standard development and, as such, greater difficulty and responsibility.

    The current Standard-setting Board Strategies and Workplans are as follows: