INTRODUCTION

A regulatory framework for the preparation of financial statements is necessary for a number of 

reasons:

- To ensure that the needs of the users of financial statements are met with at least a basic minimum 

of information.

- To ensure that all the information provided in the relevant economic arena is both comparable and 

consistent. Given the growth in multinational companies and global investment this arena is an 

increasing international one.

- To increase users' confidence in the financial reporting process.

- To regulate the behaviour of companies and directors towards their investors.

Financial reporting standards on their own would not be sufficient to achieve these aims. In addition 

there must be some legal and market-based regulation.

The (IASB) – International Accounting Standards Board issued its framework for the Preparation 

and Presentation of Financial Statements in 1989. This is referred to as its conceptual framework. The 

framework sets out the concepts that shape the preparation and presentation of financial statements for 

external users. The framework does not have the status of an accounting standard as also is the case 

with the ASB’s Statement of Principles. The IASB framework assists the IASB:

- “In the development of future International Accounting Standards and in its review of existing 

International Accounting Standards; and

- In promoting the harmonization of regulations, accounting standards and procedures relating 

presentation of financial statements by providing a basis for reducing the number of alternative 

accounting treatments permitted by International Accounting Standards.

In addition, the framework may assist:

- Preparers of financial statements in applying International Accounting Standards and in dealing 

with topics that have yet to form the subject of an International Accounting Standard;

- Auditors in forming an opinion as to whether financial statements conform with International 

Accounting Standards;

- Users of financial statements in interpreting the information contained in financial statements 

prepared in conformity with International Accounting Standards; and

- Those who are interested in the work of IASB, providing them with information about its 

approach to the formulation of accounting standards.”

To ensure the framework provides useful information it identifies a range of user groups 

(stakeholders) which include:

- Investors

- Lenders

- Employees

- Suppliers

- Other trade creditors

- Customers

- Government agencies; and

- The public

The framework comprises seven sections which cover areas as:

1. The objective of financial statements;

2. Underlying assumptions;

3. Qualitative characteristics of financial information;

4. The elements of financial statements;

5. Recognition of the elements of financial statements;

6. Measurement of the elements of financial statements;

7. Concepts of capital maintenance.

THE CONCEPTUAL FRAMEWORK

The IFRS Framework describes the basic concepts that underlie the preparation and presentation of 

financial statements for external users. The IFRS Framework serves as a guide to the Board in 

developing future IFRSs and as a guide to resolving accounting issues that are not addressed directly 

in an International Accounting Standard or International Financial Reporting Standard or Interpret.

The IFRS Framework has four chapters

Scope

The IFRS Framework addresses:

- The objective of financial reporting

- The qualitative characteristics of useful financial information

- The reporting entity

- The definition, recognition and measurement of the elements from which financial statements are 

constructed.

- Concepts of capital and capital maintenance

Chapter 1: The Objective of general purpose financial reporting

The primary users of general purpose financial reporting are present and potential investors, lenders 

and other creditors, who use that information to make decisions about buying, selling or holding 

equity or debt instruments and providing or settling loans or other forms of credit. 

The primary users need information about the resources of the entity not only to assess an entity's 

prospects for future net cash inflows but also how effectively and efficiently management has 

discharged their responsibilities to use the entity's existing resources (i.e., stewardship). 

The IFRS Framework notes that general purpose financial reports cannot provide all the information 

that users may need to make economic decisions. They will need to consider pertinent information 

from other sources as well. 

The IFRS Framework notes that other parties, including prudential and market regulators, may find 

general purpose financial reports useful. However, the Board considered that the objectives of general 

purpose financial reporting and the objectives of financial regulation may not be consistent. Hence, 

regulators are not considered a primary user and general purpose financial reports are not primarily 

directed to regulators or other parties. 

Information about a reporting entity's economic resources, claims, and changes in resources 

and claims

Economic resources and claims

Information about the nature and amounts of a reporting entity's economic resources and claims 

assists users to assess that entity's financial strengths and weaknesses; to assess liquidity and 

solvency, and its need and ability to obtain financing. Information about the claims and payment 

requirements assists users to predict how future cash flows will be distributed among those with a 

claim on the reporting entity. 

A reporting entity's economic resources and claims are reported in the statement of financial position. 

Changes in economic resources and claims

Changes in a reporting entity's economic resources and claims result from that entity's performance 

and from other events or transactions such as issuing debt or equity instruments. Users need to be able 

to distinguish between both of these changes. Financial performance reflected by accrual accounting

Information about a reporting entity's financial performance during a period, representing changes in 

economic resources and claims other than those obtained directly from investors and creditors, is 

useful in assessing the entity's past and future ability to generate net cash inflows. Such information 

may also indicate the extent to which general economic events have changed the entity's ability to 

generate future cash inflows. 

The changes in an entity's economic resources and claims are presented in the statement of 

comprehensive income. 

Financial performance reflected by past cash flows.

Information about a reporting entity's cash flows during the reporting period also assists users to 

assess the entity's ability to generate future net cash inflows. This information indicates how the entity 

obtains and spends cash, including information about its borrowing and repayment of debt, cash 

dividends to shareholders, etc. 

The changes in the entity's cash flows are presented in the statement of cash flows. [IAS 7]

Changes in economic resources and claims not resulting from financial performance

Information about changes in an entity's economic resources and claims resulting from events and 

transactions other than financial performance, such as the issue of equity instruments or distributions 

of cash or other assets to shareholders is necessary to complete the picture of the total change in the 

entity's economic resources and claims. 

The changes in an entity's economic resources and claims not resulting from financial performance is 

presented in the statement of changes in equity. [IAS 1]

Chapter 2: The Reporting entity

A reporting entity is defined as an entity in which it is reasonable to expect the existence of users who 

depend on general-purpose financial statements for information to enable them to make economic 

decisions.

The chapter on the Reporting Entity will be reconsidered as part of the IASB's comprehensive project 

on the framework.

NB; The Conceptual framework is under review and is expected to be out in March 2018.

Chapter 3: Qualitative characteristics of useful financial information

The qualitative characteristics of useful financial reporting identify the types of information are likely 

to be most useful to users in making decisions about the reporting entity on the basis of information in 

its financial report. The qualitative characteristics apply equally to financial information in general 

purpose financial reports as well as to financial information provided in other ways. 

Financial information is useful when it is relevant and represents faithfully what it purports to 

represent. The usefulness of financial information is enhanced if it is comparable, verifiable, timely 

and understandable. 

Fundamental qualitative characteristics

Relevance and faithful representation are the fundamental qualitative characteristics of useful 

financial information. 

Relevance

Relevant financial information is capable of making a difference in the decisions made by users. 

Financial information is capable of making a difference in decisions if it has predictive value, 

confirmatory value, or both. The predictive value and confirmatory value of financial information are 

interrelated. 

Materiality is an entity-specific aspect of relevance based on the nature or magnitude (or both) of the 

items to which the information relates in the context of an individual entity's financial report. 

Faithful representation

General purpose financial reports represent economic phenomena in words and numbers, to be useful, 

financial information must not only be relevant, it must also represent faithfully the phenomena it 

purports to represent. This fundamental characteristic seeks to maximise the underlying characteristics 

of completeness, neutrality and freedom from error. Information must be both relevant and faithfully 

represented if it is to be useful. 

Enhancing qualitative characteristics

Comparability, verifiability, timeliness and understandability are qualitative characteristics that 

enhance the usefulness of information that is relevant and faithfully represented. 

Comparability

Information about a reporting entity is more useful if it can be compared with similar information 

about other entities and with similar information about the same entity for another period or another 

date. Comparability enables users to identify and understand similarities in, and differences among, 

items.  

Verifiability

Verifiability helps to assure users that information represents faithfully the economic phenomena it 

purports to represent. Verifiability means that different knowledgeable and independent observers 

could reach consensus, although not necessarily complete agreement, that a particular depiction is a 

faithful representation. 

Timeliness

Timeliness means that information is available to decision-makers in time to be capable of influencing 

their decisions. 

Understandability

Classifying, characterizing and presenting information clearly and concisely makes it understandable. 

While some phenomena are inherently complex and cannot be made easy to understand, to exclude 

such information would make financial reports incomplete and potentially misleading. Financial 

reports are prepared for users who have a reasonable knowledge of business and economic activities 

and who review and analyze the information with diligence. 

Applying the enhancing qualitative characteristics

Enhancing qualitative characteristics should be maximized to the extent necessary. However, 

enhancing qualitative characteristics (either individually or collectively) render information useful if 

that information is irrelevant or not represented faithfully. 

The cost constraint on useful financial reporting

Cost is a pervasive constraint on the information that can be provided by general purpose financial 

reporting. Reporting such information imposes costs and those costs should be justified by the 

benefits of reporting that information. The IASB assesses costs and benefits in relation to financial 

reporting generally, and not solely in relation to individual reporting entities. The IASB will consider 

whether different sizes of entities and other factors justify different reporting requirements in certain 

situations. 

Chapter 4: Remaining text of the framework

This chapter contains the remaining text of the framework approved in 1989. As the project to revise 

the remaining progresses, relevant paragraphs in Chapter 4 will be deleted and replaced by new 

chapters in the IFRS Framework. Until it is replaced a paragraph in Chapter 4 has the same level of 

authority within IFRS as those in Chapter 1-3.

Underlying assumption

The IFRS Framework states that the going concern assumption is an underlying assumption. Thus, the 

financial statements presume that an entity will continue in operation indefinitely or, if that 

presumption is not valid, disclosure and a different basis of reporting are required. 

The elements of financial statements

Financial statements portray the financial effects of transactions and other events by grouping them 

into broad classes according to their economic characteristics. These broad classes are termed the 

elements of financial statements.

The elements directly related to financial position (balance sheet) are: 

- Assets

- Liabilities

- Equity

The elements directly related to performance (income statement) are: 

- Income

- Expenses

The cash flow statement reflects both income statement elements and some changes in balance sheet 

elements.

Definitions of the elements relating to financial position

- Asset. An asset is a resource controlled by the entity as a result of past events and from which 

future economic benefits are expected to flow to the entity.

- Liability. A liability is a present obligation of the entity arising from past events, the settlement 

of which is expected to result in an outflow from the entity of resources embodying economic 

benefits. 

- Equity. Equity is the residual interest in the assets of the entity after deducting all its liabilities. 

Definitions of the elements relating to performance

- Income. Income is increases in economic benefits during the accounting period in the form of 

inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other 

than those relating to contributions from equity participants. 

- Expense. Expenses are decreases in economic benefits during the accounting period in the form 

of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, 

other than those relating to distributions to equity participants. 

The definition of income encompasses both revenue and gains. Revenue arises in the course of the 

ordinary activities of an entity and is referred to by a variety of different names including sales, fees, 

interest, dividends, royalties and rent. Gains represent other items that meet the definition of income 

and may, or may not, arise in the course of the ordinary activities of an entity. Gains represent 

increases in economic benefits and as such are no different in nature from revenue. Hence, they are 

not regarded as constituting a separate element in the IFRS Framework. 

The definition of expenses encompasses losses as well as those expenses that arise in the course of the 

ordinary activities of the entity. Expenses that arise in the course of the ordinary activities of the entity 

include, for example, cost of sales, wages and depreciation. They usually take the form of an outflow 

or depletion of assets such as cash and cash equivalents, inventory, property, plant and equipment. 

Losses represent other items that meet the definition of expenses and may, or may not, arise in the 

course of the ordinary activities of the entity. Losses represent decreases in economic benefits and as 

such they are no different in nature from other expenses. Hence, they are not regarded as a separate 

element in this Framework. 

Recognition of the elements of financial statements

Recognition is the process of incorporating in the balance sheet or income statement an item that 

meets the definition of an element and satisfies the following criteria for recognition: 

- It is probable that any future economic benefit associated with the item will flow to or from the 

entity; and

- The item's cost or value can be measured with reliability.

Based on these general criteria:

- An asset is recognised in the statement of financial position when it is probable that the future 

economic benefits will flow to the entity and the asset has a cost or value that can be measured 

reliably. 

- A liability is recognised in the statement of financial position when it is probable that an outflow 

of resources embodying economic benefits will result from the settlement of a present obligation 

and the amount at which the settlement will take place can be measured reliably. 

- Income is recognised in the income statement when increase in future economic benefits related 

to an increase in an asset or a decrease of a liability has arisen that can be measured reliably. This 

means, in effect, that recognition of income occurs simultaneously with the recognition of 

increases in assets or decreases in liabilities (for example, the net increase in assets arising on a 

sale of goods or services or the decrease in liabilities arising from the waiver of a debt payable). 

- Expenses are recognised when decrease in future economic benefits related to a decrease in an 

asset or an increase of a liability has arisen that can be measured reliably. This means, in effect, 

that recognition of expenses occurs simultaneously with the recognition of an increase in 

liabilities or a decrease in assets (for example, the accrual of employee entitlements or the 

depreciation of equipment). 

Measurement of the elements of financial statements

Measurement involves assigning monetary amounts at which the elements of the financial statements 

are to be recognised and reported. 

The IFRS Framework acknowledges that a variety of measurement bases are used today to different 

degrees and in varying combinations in financial statements, including: 

- Historical cost

- Current cost

- Net realisable (settlement) value

- Present value (discounted)

Historical cost is the measurement basis most commonly used today, but it is usually combined with 

other measurement basis. The IFRS Framework does not include concepts or principles for selecting 

which measurement basis should be used for particular elements of financial statements or in 

particular circumstances. Individual standards and interpretations do provide this guidance, however.

STEPS IN DEVELOPING INTERNATIONAL FINANCIAL INTERPRETATIONS 

BY IFRIC (EXCLUDING DETAILED IFRICS)

IFRS Interpretations Committee

The IFRS Interpretations Committee (Interpretations Committee) is the interpretative body of the 

International Accounting Standards Board (Board). The Interpretations Committee works with the 

Board in supporting the application of IFRS Standards.

The Interpretations Committee responds to questions about the application of the Standards and does 

other work at the request of the Board. 

The Interpretations Committee comprises 14 voting members, appointed by the Trustees of the IFRS 

Foundation. The members provide the best available technical expertise and diversity of international 

business and market experience relating to the application of IFRS Standards. 

Responsibilities of the IFRIC and scope of its work

In the context of its requirements for due process, the IFRIC reviews newly identified financial 

reporting issues not specifically addressed in IFRSs or issues where unsatisfactory or conflicting 

interpretations have developed, or seem likely to develop in the absence of authoritative guidance, 

with a view to reaching a consensus on the appropriate treatment.

In providing interpretative guidance, the IFRIC applies a principle-based approach founded on the 

Framework for the Preparation and Presentation of Financial Statements. The IFRIC considers the 

principles articulated in relevant IFRSs to develop its interpretative guidance and to determine that the 

proposed guidance does not conflict with IFRSs. It follows that the IFRIC is not seeking to create an 

extensive rule-oriented environment in providing interpretative guidance. Neither does it act as an 

urgent issues group.

The IFRIC does not reach a consensus that changes or conflicts with IFRSs or the Framework. If the 

IFRIC concludes that the requirements of an IFRS differ from the Framework, it obtains direction 

from the IASB before providing guidance. In reaching its consensus views, the IFRIC also has due 

regard for the need for international convergence.

The IFRIC informs the IASB of any existing or emerging issues that it perceives as indicative of 

inadequacies in IFRSs or the Framework. If the IFRIC believes that an IFRS or the Framework should 

be modified or an additional IFRS should be developed, it refers such conclusions to the IASB for its 

consideration.

When the IFRIC reaches a consensus on an issue, that consensus is made publicly available to 

interested parties on a timely basis in a document entitled an IFRIC Interpretation (or Amendment to 

an Interpretation). The Interpretations issued by the IFRIC are developed in accordance with a due 

process of consultation and debate including making draft Interpretations available for public 

comment

THE IFRIC DUE PROCESS 

The IFRIC due process comprises seven stages. These stages are;-

Stage 1: Identification of issues

Stage 2: Agenda Committee and new agenda items

Stage 3: IFRIC meetings and voting 

Stage 4: Development of a draft Interpretation 

Stage 5: IASB role in the release of a draft Interpretation 

Stage 6: Comment period and deliberation 

Stage 7: IASB role in the issue of a final Interpretation 

Stage 1: Identification of issues

The primary responsibility for identifying issues to be considered by the IFRIC is that of its members 

and observers. Preparers, auditors and others with an interest in financial reporting are encouraged to 

refer issues to the IFRIC when they believe that divergent practices have emerged regarding the 

accounting for particular transactions or circumstances or when there is doubt about the appropriate 

accounting treatment and it is important that a standard treatment be established.

An issue may be put forward by any individual or organisation. A template for submission is available 

on the IASB Website. A submission can be made either by email or by post to the IASB address for 

the attention of the IFRIC coordinator. A submission should contain both a detailed description of the 

issue (including a description of alternative solutions referring to the relevant IASB pronouncements) 

and an evaluation of the issue using the criteria for agenda items.

The IASB staff considers whether the item meets the agenda criteria. They subsequently assess the 

issue and provide analysis and recommendations to the IFRIC.

Stage 2: Agenda Committee and new agenda items

The Agenda Committee assists the IASB staff in presenting the issues to the IFRIC so that the IFRIC 

can decide whether to add an issue to its agenda. The source of a suggested agenda item is not 

revealed to the Agenda Committee or to others. 

The Agenda Committee may recommend an issue for addition to the IFRIC agenda. The Agenda 

Committee does not decide which issues should be added to the IFRIC agenda. The Committee’s role 

is limited to the presentation of analysis and recommendations to the IFRIC. 

In determining whether to recommend that an issue be included on the IFRIC agenda, the Agenda 

Committee considers a set out criteria, although an issue does not have to satisfy all the criteria as a 

precondition for recommendation. 

The Agenda Committee will conduct its business in meetings and may use the same means of 

attendance that are open to IFRIC meetings. It is not a decision-making body and does not meet in 

public. The papers for Agenda Committee meetings are available to any IFRIC member on request. 

The Agenda Committee reports to the IFRIC at its regular meetings on the issues the Agenda 

Committee considered for addition to the IFRIC’s agenda and the Agenda Committee’s 

recommendation on each issue. The IFRIC assesses proposed agenda items against the following 

criteria. An issue does not have to satisfy all the criteria to qualify for assessment

Stage 3: IFRIC meetings and voting

The IFRIC meets in public following procedures similar to the IASB’s general policy for its Board 

meetings. At such meetings the IFRIC debates both matters that are on its agenda and items proposed 

to be added to its agenda. IFRIC members and observers are expected to attend meetings in person. 

However, meetings may be held using teleconference or any other communication facilities that 

permit simultaneous communication among all members and observers and allow public observers to 

hear all participants.

Nine voting members of the IFRIC present in person or by telecommunications constitute a quorum. 

[The quorum is reduced to eight voting members for a maximum of three meetings from a vacancy 

occurring, if the vacancy remains unfilled. If more than one vacancy exists at a time, the quorum is 

not further reduced and the original three meeting limit is not extended.]* Each IFRIC member has 

one vote. Members vote in accordance with their own independent views, not as representatives 

voting according to the views of any firm, organisation or constituency with which they may be 

associated. Proxy voting is not permitted. 

The Chairman may invite others to attend meetings of the IFRIC as advisers when specialized input is 

required. A member or observer may also, with the prior consent of the Chairman, bring to a meeting 

an adviser who has specialized knowledge of a topic to be discussed. Such invited advisers will have 

the right to speak.

Stage 4: Development of a draft Interpretation

The IFRIC reaches its conclusions on the basis of information contained in Issue Summaries that are 

prepared under the supervision of IASB staff. An Issue Summary describes the issue to be discussed 

and provides the information necessary for IFRIC members to gain an understanding of the issue and 

make decisions about it. An Issue Summary is developed for the IFRIC’s consideration after a 

thorough review of the authoritative accounting literature and possible alternatives, including 

consultation where appropriate with national standard-setters. An Issue Summary may include: 

(a) A brief description of the transaction or event. 

(b) The specific issues or questions to be considered by the IFRIC. 

(c) The relevant concepts from the Framework. 

(d) A description of potential appropriate alternative treatments based on those concepts, with the 

arguments in favour and against each alternative.  

(e) A list of the relevant IASB pronouncements as well as those of national standard-setters, 

identifying any inconsistency between the alternative treatments, the relevant concepts, and the 

standards. 

(f) Recommendations on the appropriate accounting treatment.

A draft Interpretation is developed on which the IFRIC votes. Voting takes place at a public meeting. 

A consensus is achieved when no more than three members have voted against the proposal. 

An Interpretation includes: 

(a) a summary of the accounting issues identified; 

(b) The consensus view reached on the appropriate accounting; 

(c)References to relevant IFRSs, parts of the Framework and other pronouncements that have been 

drawn upon to support the consensus view; and 

(d) The effective date and transitional provisions.

Stage 5: IASB role in the release of a draft Interpretation

IASB members have access to all IFRIC agenda papers. They are expected to comment on technical 

matters as the issues are being considered, particularly if they have concerns about alternatives the 

IFRIC is considering. 

IASB members are informed when the IFRIC reaches a consensus in a draft Interpretation. The draft 

Interpretation is released for public comment unless five or more IASB members object within a week 

of being informed of its completion. 

If a draft Interpretation is not released because of IASB members’ objections, the issue will be 

considered at the next IASB meeting. On the basis of discussion at the meeting, the IASB will decide 

whether the draft Interpretation should be issued or whether the matter should be referred back to the 

IFRIC, added to its own agenda or not be the subject of any further action.

Stage 6: Comment period and deliberation 

Draft Interpretations are made available for public comment for 60 days. If the need for an 

Interpretation is particularly urgent, the comment period may be as short as 30 days. All comments 

received during the comment period are considered by the IFRIC before an Interpretation is finalized. 

Unless confidentiality is requested by the commentator, the comment letters will be made publicly 

available. A staff summary and analysis of the comment letters will be provided to the IFRIC. If the 

proposed Interpretation is changed significantly, the IFRIC will consider whether it should be reexposed. Re-exposure is not required automatically and will depend on the significance of the changes 

contemplated, whether they were raised in the Basis for Conclusions of the draft Interpretation or in 

questions posed by the IFRIC, their significance for practice and what may be learned by the IFRIC 

from re-exposure.

Stage 7: IASB role in the issue of a final Interpretation 

When the IFRIC has reached a consensus on a final Interpretation, the Interpretation is put to the 

IASB for ratification, in a public meeting, before being issued. Approval by the IASB requires at least 

nine IASB members to be in favour. 

The IASB votes on the Interpretation as submitted by the IFRIC. If an Interpretation is not approved 

by the IASB, the IASB provides the IFRIC with an analysis of the objections and concerns of those 

voting against the Interpretation. On the basis of this analysis, the IASB will decide whether the 

matter should be referred back to the IFRIC, added to its own agenda or not be the subject of any 

further action. 

STEPS IN THE STANDARD-SETTING PROCESS

The IASB’s standard-setting process comprises six stages, with the Trustees having the opportunity to 

ensure compliance at various points throughout the process.

Stage 1: Setting the agenda

The IASB, by developing high quality accounting standards, seeks to address a demand for better 

quality information that is of value to all users of financial statements. Users include present and

potential investors, employees, lenders, suppliers and other trade creditors, customers, governments 

and their agencies and the public. Better quality information will also be of value to preparers of 

financial statements. 

Although not all of the information needs of these users can be met by financial statements, there are 

common needs for all users. As investors are providers of risk capital to the entity, the provision of 

financial statements that meet their needs will also meet most of the needs of other users. The IASB 

therefore evaluates the merits of adding a potential item to its agenda mainly by reference to the needs 

of investors.

When deciding whether a proposed agenda item will address users’ needs the IASB considers: 

(a) The relevance to users of the information and the reliability of information that could be provided 

(b) Existing guidance available 

(c)the possibility of increasing convergence 

(d) The quality of the standard to be developed 

(e) Resource constraints.

To help the IASB in considering its future agenda, its staff are asked to identify, review and raise 

issues that might warrant the IASB’s attention. New issues may also arise from a change in the 

IASB’s conceptual framework. In addition, the IASB raises and discusses potential agenda items in 

the light of comments from other standard-setters and other interested parties, the SAC and the IFRIC, 

and staff research and other recommendations.

The IASB receives requests from constituents to interpret, review or amend existing publications. The 

staff consider all such requests, summarise major or common issues raised, and present them to the 

IASB from time to time as candidates for when the IASB is next considering its agenda 

The IASB’s discussion of potential projects and its decisions to adopt new projects take place in 

public IASB meetings. Before reaching such decisions the IASB consults the SAC and accounting 

standard-setting bodies on proposed agenda items and setting priorities. In making decisions regarding 

its agenda priorities, the IASB also considers factors related to its convergence initiatives with 

accounting standard-setters. The IASB’s approval to add agenda items, as well as its decisions on 

their priority, is by a simple majority vote at an IASB meeting.

When the IASB considers potential agenda items, it may decide that some issues require additional 

research before it can take a decision on whether to add the item to its active agenda. Such issues may 

be addressed as research projects on the IASB’s research agenda. A research project normally requires 

extensive background information that other standard-setters or similar organisations with sufficient 

expertise, time and staff resources could provide.

Research projects are normally carried out by other standard-setters under the supervision of, and in 

collaboration with, the IASB. In the light of the result of the research project (normally a discussion 

paper, see paragraph 32), the IASB may decide, in its public meetings, to move an issue from the 

research project to its active agenda.