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Financial Accounting · The regulatory framework

IASB Due Process: How an IFRS Standard Is Developed

Updated 11 October 2026 · Fact-checked

IASB due process is the open, consultative route an IFRS Accounting Standard follows before it is issued. The main stages are setting the agenda, research and often a discussion paper, an exposure draft with public comment, then the final standard and later review. Know the order, and what each document is for.

Understand The Standard-Setting Process and Due Process

Accounting standards affect many people: preparers, investors, lenders, auditors and regulators. If a small group wrote them in private, users could distrust them. Due process is the set of steps the IASB follows so that its work is open, transparent and based on evidence. The IFRS Foundation oversees this process.

The process starts with agenda setting. The IASB decides which reporting problems to work on. It takes advice from others, including the IFRS Advisory Council, and it consults the public on its priorities. A project is added to the work plan only if it is judged worthwhile.

Next comes research and development of proposals. For bigger or more uncertain topics, the IASB may publish a discussion paper. This sets out the issue, the possible approaches and the IASB's early thinking. It asks for views before any firm proposal exists. A discussion paper is not compulsory for every project.

The key step is the exposure draft. This is a draft of the proposed standard or amendment. It is published for public comment, normally with a set comment period. Think of it as the actual proposal, not a general discussion. The IASB then reviews the comment letters, may hold meetings and consultations, and may change its proposals.

After that, the IASB votes and issues the final standard, with a basis for conclusions explaining its reasoning. Later, it reviews how the standard works in practice (a post-implementation review). The IFRS Interpretations Committee (IFRIC) deals with application questions in the meantime.

Key formulas to remember

Sequence of due process
Agenda setting → research / discussion paper (if used) → exposure draft → final IFRS → post-implementation review
Know the order. The discussion paper is optional; the exposure draft is the stage where a specific proposal is published for comment.
Discussion paper vs exposure draft
Discussion paper = ideas and options; Exposure draft = specific proposed requirements
A discussion paper asks 'what should we do?'. An exposure draft asks 'do you agree with what we propose?'.
Purpose of due process
Transparency + consultation + evidence = credible standards
Use this idea to answer why-questions.

How to solve The Standard-Setting Process and Due Process questions

Use this method for any objective test question on how standards are developed.

  1. 1Read the question and decide what is being asked: the order of stages, the purpose of a document, or the reason for due process.
  2. 2Place the item on the timeline: agenda, discussion paper, exposure draft, final standard, review.
  3. 3Ask whether the wording describes a general discussion of options (discussion paper) or specific proposed wording (exposure draft).
  4. 4Check for public consultation. If the question mentions comment letters on proposed requirements, think exposure draft.
  5. 5Remember that discussion papers are not always issued, so reject options saying they are always required.
  6. 6Eliminate options that put the final standard before consultation or that mention private, non-public development.
  7. 7Choose the best remaining option and check it against the order.

Quickest way: Timeline and keyword check

When to use it: Use this when you have about a minute for a multiple choice or ordering question.

  1. Picture the line: Agenda, DP, ED, IFRS, review.
  2. Spot the keyword: 'options' or 'early views' means discussion paper; 'proposed standard' or 'comment period' means exposure draft.
  3. Cross out any option saying a step is always compulsory if it is the discussion paper.
  4. If ordering steps, put the exposure draft immediately before the final standard.
  5. Pick the answer and move on.

Common mistakes in The Standard-Setting Process and Due Process

  • Treating the discussion paper and exposure draft as the same thing

    Both are published for comment, so they sound alike.

    Fix: Link the discussion paper to ideas and options, and the exposure draft to specific proposed requirements.

  • Saying a discussion paper is always issued

    Students memorise the full sequence as fixed.

    Fix: State that a discussion paper is often used for larger projects but is not mandatory for all.

  • Placing the exposure draft after the final standard

    Students confuse 'exposure' with publication of the final text.

    Fix: Remember that the draft comes first so that comments can change the final standard.

  • Thinking only accountants can comment

    Students assume standard setting is a technical matter for professionals.

    Fix: Remember that due process is open to the public, including investors, preparers, regulators and others.

  • Confusing the IASB's role with IFRIC's

    Both bodies are part of the same structure.

    Fix: The IASB develops standards through due process. IFRIC deals with application questions and interpretations.

Worked examples

Example 1

Which ONE of the following correctly describes an exposure draft issued by the IASB? A) A final standard that is ready for use. B) A draft of proposed requirements published for public comment. C) A general paper setting out options with no specific proposals. D) A decision on which topics to work on next.

Show the solution
  1. Identify the stage: an exposure draft sits just before the final standard.
  2. Its purpose is to put specific proposals out for comment.
  3. A is the final standard, so it is wrong.
  4. C describes a discussion paper, so it is wrong.
  5. D describes agenda setting, so it is wrong.
  6. B matches the definition.

Answer: B

Example 2

Put these stages in the correct order for a major IASB project: (1) final IFRS issued, (2) exposure draft, (3) agenda setting, (4) discussion paper. Which sequence is correct? A) 3, 4, 2, 1. B) 4, 3, 2, 1. C) 3, 2, 4, 1. D) 2, 3, 4, 1.

Show the solution
  1. Start with agenda setting, since the IASB must choose the project first: stage 3.
  2. For a major project, a discussion paper then seeks early views on options: stage 4.
  3. The exposure draft follows, with specific proposals: stage 2.
  4. The final IFRS comes last, after comments are considered: stage 1.
  5. The sequence is 3, 4, 2, 1.

Answer: A

Exam tips

  • Learn the order of stages first. Many questions are just ordering tests.
  • Memorise one-line definitions: discussion paper for options, exposure draft for specific proposals.
  • Watch for words like 'always' or 'must' about the discussion paper. These usually signal a wrong option.
  • For why-questions, answer with transparency, consultation and credibility of standards.
  • In multiple response questions, read how many options you must select and tick exactly that number.

Practice questions from The regulatory framework

The Standard-Setting Process and Due Process in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

The Standard-Setting Process and Due Process: frequently asked questions

What are the steps in developing an IFRS?

The IASB sets its agenda, carries out research, often publishes a discussion paper, then issues an exposure draft for comment. It reviews the feedback and issues the final standard. It later reviews how the standard is working.

What is the difference between a discussion paper and an exposure draft?

A discussion paper explores an issue and options and asks for early views. An exposure draft sets out specific proposed requirements and asks for comments on them. The exposure draft is closer to the final standard.

Is a discussion paper compulsory?

No. The IASB often uses one for larger or more complex projects, but it does not have to issue one for every project.

Why does the IASB use due process?

Due process makes standard setting open and evidence-based. Consulting users, preparers and regulators helps produce standards that are credible and workable.