Our Ref.: C/FRSC26 July 2019Erkki LiikanenThe Trustees of the IFRS FoundationColumbus Building7 Westferry CircusCanary WharfLondon E14 4HDUnited KingdomDear Erkki,Proposed amendments to the IFRS Foundation Due Process HandbookThe Hong Kong Institute of Certified Public Accountants (HKICPA) is the only bodyauthorised by law to set and promulgate standards relating to financial reporting, auditingand ethics for professional accountants, in Hong Kong. We are grateful for theopportunity to provide you with our views on the proposed amendments to the IFRSFoundation Due Process Handbook.The HKICPA appreciates the efforts of the Trustees of the IFRS Foundation, throughtheir Due Process Oversight Committee (DPOC), to ensure that the IFRS Foundationdue process remains fit for purpose and continues to reflect best practice. We generallysupport most of the proposals to refine the due process as they are to reflect existingpractice of the IASB and the IFRS Interpretations Committee. However, the HKICPA hassome concerns about the due process procedures relating to agenda decisions andeducational material.Agenda DecisionsThe HKICPA was informed that many constituents find it difficult to keep track of ongoingtentative or final agenda decisions. Given this situation and the function of agendadecisions in supporting consistent IFRS application, the HKICPA is concerned that thehigh volume of agenda decisions that are being issued is not an effective tool. TheHKICPA's concern is exacerbated by the proposal to provide the IASB with the ability topublish its own agenda decisions which will result in even more agenda decisions. Wealso have concern that agenda decisions maintained separately from the Standards andpublished a long time ago may no longer be relevant to the existing standards. In thisregard, we recommend the IFRS Foundation considers the following:
a) For agenda decisions that are likely to lead to a prevalent and significant change inpractice (which can be identified through the responses that the IFRS InterpretationsCommittee receives during its tentative agenda decision consultation), the IASBshould add clarification of the principles and requirements in the body of theStandards (ie issued as mandatory guidance in part A of IFRS Standards) or in theillustrative examples in part B of IFRS Standards (non-mandatory guidance). Thismight be done through the annual improvements process. Clarifications made thisway are easier for constituents to follow. Issuance of additional clarification in thebody of the Standards would also benefit from clear transition requirements/effectivedate.b) For agenda decisions that are purely educational in nature and are unlikely to leadto a prevalent/significant change in practice, the IASB could instead incorporate thenon-mandatory guidance into its other forms of educational material, eg webcasts,articles.The HKICPA understands that the IASB’s full due process is required if addingclarification of the principles and requirements in the body of the Standards (part A) andillustrative examples (part B), and this may delay the issue of final guidance.Nevertheless the HKICPA thinks that the benefits of having the guidance mentioned inpoint (a) above as part A or B of the Standards would justify this delay.Educational MaterialThe HKICPA supports the proposal to clarify that all educational material should besubject to at least some level of IASB member review. However, we note that theproposed category stated in paragraph 8.10(c) 'material explaining or illustrating how therequirements in an IFRS Standard might be applied to particular transactions orcircumstances' appears similar to part B of the Standard but the educational material isnot subject to any external due process. We suggest that such educational material thatis likely to lead to a prevalent and significant change in practice, should be included inpart B of the Standards which is subject to the IASB’s full due process, and not in otherforms.Finally, if the DPOC were to proceed with its current proposal on agenda decisions andeducational material, the HKICPA recommends that the IFRS Foundation shouldconsider ways to raise the awareness of the existence and nature (ie non-mandatory) ofthis guidance (eg publish an individual news story for the issuance of tentative agendadecisions and finalised agenda decisions, provide educational updates for constituents).If you have any questions regarding the matters raised in this letter, please contact meor Katherine Leung (katherineleung@hkicpa.org.hk), Associate Director of the StandardSetting Department.Sincerely,Christina NgDirector, Standard Setting Department
Proposed amendments to the IFRS Foundation Due Process Handbook
下载原件Our Ref.: C/FRSC26 July 2019Erkki LiikanenThe Trustees of the IFRS FoundationColumbus Building7 Westferry CircusCanary WharfLondon E14 4HDUnited KingdomDear Erkki,Proposed amendments to the IFRS Foundation Due Process HandbookThe Hong Kong Institute of Certified Public Accountants (HKICPA) is the only bodyauthorised by law to set and promulgate standards relating to financial reporting, auditingand ethics for professional accountants, in Hong Kong. We are grateful for theopportunity to provide you with our views on the proposed amendments to the IFRSFoundation Due Process Handbook.The HKICPA appreciates the efforts of the Trustees of the IFRS Foundation, throughtheir Due Process Oversight Committee (DPOC), to ensure that the IFRS Foundationdue process remains fit for purpose and continues to reflect best practice. We generallysupport most of the proposals to refine the due process as they are to reflect existingpractice of the IASB and the IFRS Interpretations Committee. However, the HKICPA hassome concerns about the due process procedures relating to agenda decisions andeducational material.Agenda DecisionsThe HKICPA was informed that many constituents find it difficult to keep track of ongoingtentative or final agenda decisions. Given this situation and the function of agendadecisions in supporting consistent IFRS application, the HKICPA is concerned that thehigh volume of agenda decisions that are being issued is not an effective tool. TheHKICPA's concern is exacerbated by the proposal to provide the IASB with the ability topublish its own agenda decisions which will result in even more agenda decisions. Wealso have concern that agenda decisions maintained separately from the Standards andpublished a long time ago may no longer be relevant to the existing standards. In thisregard, we recommend the IFRS Foundation considers the following:
a) For agenda decisions that are likely to lead to a prevalent and significant change inpractice (which can be identified through the responses that the IFRS InterpretationsCommittee receives during its tentative agenda decision consultation), the IASBshould add clarification of the principles and requirements in the body of theStandards (ie issued as mandatory guidance in part A of IFRS Standards) or in theillustrative examples in part B of IFRS Standards (non-mandatory guidance). Thismight be done through the annual improvements process. Clarifications made thisway are easier for constituents to follow. Issuance of additional clarification in thebody of the Standards would also benefit from clear transition requirements/effectivedate.b) For agenda decisions that are purely educational in nature and are unlikely to leadto a prevalent/significant change in practice, the IASB could instead incorporate thenon-mandatory guidance into its other forms of educational material, eg webcasts,articles.The HKICPA understands that the IASB’s full due process is required if addingclarification of the principles and requirements in the body of the Standards (part A) andillustrative examples (part B), and this may delay the issue of final guidance.Nevertheless the HKICPA thinks that the benefits of having the guidance mentioned inpoint (a) above as part A or B of the Standards would justify this delay.Educational MaterialThe HKICPA supports the proposal to clarify that all educational material should besubject to at least some level of IASB member review. However, we note that theproposed category stated in paragraph 8.10(c) 'material explaining or illustrating how therequirements in an IFRS Standard might be applied to particular transactions orcircumstances' appears similar to part B of the Standard but the educational material isnot subject to any external due process. We suggest that such educational material thatis likely to lead to a prevalent and significant change in practice, should be included inpart B of the Standards which is subject to the IASB’s full due process, and not in otherforms.Finally, if the DPOC were to proceed with its current proposal on agenda decisions andeducational material, the HKICPA recommends that the IFRS Foundation shouldconsider ways to raise the awareness of the existence and nature (ie non-mandatory) ofthis guidance (eg publish an individual news story for the issuance of tentative agendadecisions and finalised agenda decisions, provide educational updates for constituents).If you have any questions regarding the matters raised in this letter, please contact meor Katherine Leung (katherineleung@hkicpa.org.hk), Associate Director of the StandardSetting Department.Sincerely,Christina NgDirector, Standard Setting Department