Companies sometimes complain about the outcomes of accounting standards that have been developed overseas, but the sources of stakeholder feedback on specific proposals are seldom analysed by news media.
One could speculate on the reasons this is the case: accounting tends to be dry unless a major company is drowning in a sea of red; feedback tends to be technical rather than sexy from a reporting standpoint; and it is hard for journalists and commentators to place concrete numbers on what a standard means for companies if a proposal is under development.
It might not be exciting, but there is merit in diving into the most recent analysis of the consultation paper on goodwill and impairment issued by the International Accounting Standards Board to get a sense of how many submissions hit the desk of the international board on a topic.
What did the international board do to get new feedback on a topic that has reared its head multiple times over many decades?
The international standard setter held a series of outreach meetings across the globe either facilitated by themselves or in conjunction with domestic standard setters. These are interactive sessions and standard setters will often get frank verbal feedback from people who won’t take the time to write a submission.
There were 94 of these types of sessions. Thirty were with users and user groups. sometimes in conjunction with national standard setters; 20 were webinars or conferences; 18 meetings were held with fellow standard setters; and, of course, 14 meetings with preparers and their representative groups.
Accounting firms and accounting bodies had eight meetings with the IASB on this topic, academics met with the team members of the IASB on three occasions, and there was one specific meeting with a body representing regulators.
The IASB has its own consultative forums and they were drawn into the discussion on goodwill and impairment with committees such as the Accounting Standards Advisory Forum, emerging Economies Group, Global Preparer Forum, and Capital Markets Advisory Forum.
But as all good television shopping network segments say – there is more!
Fieldwork was used to kick the tyres of proposals put forward by the standard setters and eight entities from Australia, China, France, Italy, Japan, Switzerland and the UK. Banking, construction and engineering, electronics companies, media, insurance, pharmaceuticals and utilities were represented in the fieldwork exercise.
Then you have the ubiquitous comment letters. The IASB got 193 comment letters on this topic but 24 were from coursework assignments done by students on this topic. IASB technical staff did not include any of the material from the student submissions in the board analysis.
Europe accounted for 71 submissions, Asian countries for 31, the US and Canada for 17 and some category called ‘international’ for 16. Eleven submissions came from Oceania.
Who sent these letters? Standard setters representing specific jurisdictions sent 31, groups representing those preparers doing the hard slog sent 24, individual preparers sent 23 as did global accounting bodies, and 21 individuals bothered to write to the IASB.
You can see from that summing up that there is an interest from various organisations that represent different pressure groups in a capital market.
What you can also observe is that it appears people rely on representative bodies to do much of the heavy lifting when it comes to engaging with the accounting standard setting board internationally.
It should be a concern, however, to those watching processes like this when they see the entire world represented by the group documented in the agenda paper.
How should standard setters react to criticisms of any final product if people who failed to participate in the consultation process then start to complain?