International Financial Reporting Standards (IFRSs) are overseen by the International Accounting Standards Board (IASB). The exposure draft in IFRS is a kind of statement that is periodically released by the IASB with proposed changes to this accounting method. It is meant to elicit feedback from relevant parties in the field. Once it has considered the opinions of other professionals in the field, the IASB decides whether it needs to revise the proposal made in the document or if it is ready to be adopted.
An exposure draft in IFRS is a required step in the due process towards an official change in standards. It typically proposes one thing. This is meant to represent the amendment or change in whole, rather than being an opening point for discussion.
The exposure draft in IFRS may be used to suggest changes in how a certain aspect is approached or how and when it is reported. Then accountants and other similar professionals in the field can analyze the proposed changes and decide whether or not they are practical. The IASB will make a decision about whether or not to enact the change suggested in the proposal based on the responses it gets to the exposure draft.
Before the IASB releases an IFRS exposure draft, it will usually thoroughly research the issue at hand. Based on staff recommendations, a draft will be written. Several groups within the IASB will analyze, discuss, and otherwise examine the draft. Once it appears the document is ready for public perusal, the organization will make a final vote as to whether it should be released.
An exposure draft in IFRS may be preceded by a discussion paper. This document typically contains several pages and covers many aspects of the issue at hand. It may present different options for approaching a solution or new information about an issue that can help readers to make a decision. These documents are usually released with contact information and a request for comments.
Though a discussion paper can inspire feedback that is useful for the completion of an exposure draft, it is not always necessary. It is typically used for complex situations where there are several ways to approach an issue or if it is not clear to the IASB how to proceed. The additional public feedback can improve the process of creating the exposure draft. This can make it more likely that people in the field will accept the proposal, as they have played a role in its creation.