The ASB follows these procedures and practices when developing an accounting standard or other definitive statement.
Once the ASB has decided to include a topic in its work programme, the task of managing the project is given to one of the ASB's project directors. The project directors are professionally qualified accountants, some directly employed and some on secondment from large accounting firms.
The project director works under the supervision of the chairman and technical director, and is responsible for undertaking the necessary research and identifying sources of expertise. As the project develops, the project director identifies issues and suggests solutions, and debates them with the Board.
Normally, a panel of ad hoc consultants will be created. Typically these will include technical partners from some of the larger firms, preparers and users of accounts and academics. The consultants are chosen for their special knowledge or expertise in the topic, and act as a sounding board for the project director.
For most major projects, the first formal stage of the development of a standard will be the publication of a Discussion Paper. Such documents normally set out the need for a new or revised accounting standard, describe the problems perceived and suggest various ways in which a solution might be developed. At this stage the Board will not necessarily have a preferred solution, and the objective is to canvass the views of the interested public on the possible approaches. A period of time (normally three months) is given for comments to be sent to the project director.
When the comments have been received they are analysed, and the Board considers the issues raised by respondents. Unless the respondent has requested confidentiality, sets of responses received are placed on the public record and copies may be purchased from the ASB.
In the course of deciding which of the available options to adopt, the Board may pursue further enquiries with interested parties, or field-test possible procedures. The ASB will then publish for further public comment an exposure draft designated a FRED (Financial Reporting Exposure Draft). Sometimes the document will also invite comments on an alternative approach.
Again, when the responses are received they are analysed and considered before the Board reaches its conclusion and issues its final pronouncement in the form of a Financial Reporting Standard or other publication, which specifies the date on which it becomes effective.
