EFRAG Publishes Final Comment Letter on the ED IFRS Foundation Due Process Handbook Amendments
EFRAG has published its Final Comment Letter on the Exposure Draft IFRS Foundation Due Process Handbook Amendments, welcoming the proposed updates. The IFRS Foundation published the Amendments in December 2024 with the aim of reflecting the creation of the ISSB and introducing clarifications and enhancements to the standard-setting process.
In the document, EFRAG has recommended:
- The development of a conceptual framework dedicated to sustainability reporting;
- An interpretations committee for sustainability reporting is created;
- SASB standards and the SASB standards Taxonomy in the scope of the due process procedures foreseen for ISSB standard setting;
- The Post-implementation Review process to be more forward-looking, assessing whether the Standard under review remains effective within an evolving economic environment; and
- Connectivity is to be considered in deciding upon new IFRS Accounting Standards or major amendments, for development of IFRS Sustainability Standards interoperability with other sustainability frameworks is to be considered.
To enhance and clarify the Handbook, EFRAG further suggested that where projects take longer than expected, back-testing should be conducted to evaluate the continued relevance of the original rationale. EFRAG also encouraged the ISSB to build on the work of other sustainability standard-setters, even where such work is still under development, and recommended the alignment of advisory groups across financial and sustainability reporting. In addition, it proposed consolidating the IFRS Interpretations Committee’s organisation into a single chapter within the Handbook, developing criteria to distinguish between educational material and guidance, and requiring a supermajority to initiate, pause, or retire major projects in order to address the current imbalance in workplan decisions. Finally, EFRAG supported the use of comment periods exceeding 120 days where field testing is necessary.