The two major standard-setting organizations in the world Financial

Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB)
as a private organizations serving a broad public interest, had adopted an open decision-making
process that permits considerable interaction between the Boards and its constituents. This
interaction takes many forms and One major part of interaction is in the form of comment letters.
Comment letters are received from constituents in response to Discussion Papers,
Exposure Drafts, and other discussion documents that are released to the public for comment.
So,Comment letters, become an important part of a project's public record, are an
important source of information regarding constituents' views on and experiences related to
issues raised in a discussion document.Participation in the process of standard setting is
considered important because it generates information which can help the standardsetter measure
the potential reaction of interest groups to the standards it issues(Jorissen et al. 2013).
In the consultation procedures written comments remain the cornerstone of consultation:
“Comment letters play a pivotal role in the deliberations process of both the IASB and its
Interpretations Committee, because they provide considered and public responses to a formal
consultation” (IFRS Foundation 2016, section 3.64).
All comment letters received by the IASB are available on the IFRS Foundation website.
Portions of a comment letter may be withheld from the public if publication would be harmful to
the submitting party, for example, if the letter potentially breached securities disclosure laws.
When considering comment letters, the IASB assesses the matters raised and the related
explanations and evidence provided by respondents.
The analysis provided in comment letters, and the evidence supporting the analysis, that
is important. An analysis of the type of respondent and their geographical origin can help the
IASB assess whether there are any areas or types of respondent for which additional outreach
might be appropriate.
For some technical matters it can be helpful if the technical staff provide the IASB with
an analysis of the extent to which the views of particular sectors are shared or divided—for
example, the extent to which investors have a common view or whether views differ between the
types of respondent or regions.
Feedback from any fieldwork, public hearings or other outreach is summarised in a
technical Staff Paper and assessed by the IASB along with the comment letters.
Once the comment period for a Discussion Paper ends the project team analyses and
summarises the comment letters and provides that analysis and summary to the IASB.
For example, for the IFRS 8, the IASB received and analyzed 62 comment letters and
conducted 36 outreach events taking the form of discussion forums, conferences,webcasts, and
individual meetings facilitated locally by national and regional standardsetters,academics and
regulators.
The usual format of comment letters, generally begin with an introductory paragraph
highlighting key issues before tackling technical details in the body of the letter. Thus, if
‘‘relevance’’ and ‘‘reliability’’ are sufficiently important concerns for a letter writer, the
comment letters should have:
 (1) a positive context, i.e., whether the letter is indicating that the proposed standard will
increase ‘‘relevance’’/‘‘reliability;’’
 (2) a negative context, i.e., whether the letter is indicating that the proposed standard will
decrease ‘‘relevance’’/‘‘reliability;’’ or
  (3) a context that is irrelevant to the use of ‘‘relevance’’ and ‘‘reliability’’ as accounting
principles.
Examples from actual sentences in the comment letters are below.
Positive context: ‘‘We support the approach followed in the Exposure Draft and believe
that application of those standards will provide relevant and understandable information as well
as an appropriate balance between comparability and flexibility.’’ (Source: Arthur Andersen’s
comment letter on proposed SFAS 117).
Negative context: ‘‘We also believe the Proposed Standard exacerbates the complexities
of Statement 125 and permits recognition of revenue that cannot be reliably measured.’’( Source:
Deloitte’s comment letter on proposed SFAS 140).
Irrelevant usage: ‘‘The auditor should familiarize himself with the relevant provisions of
the partnership agreement.’’ (Source: Arthur Andersen’s comment letter on proposed SFAS
102).
An analysis of comment letters sent directly to the IASB over the period 2002–2006,
reveals that preparers sent most letters followed by the accounting profession and standard
setters. Concentrating on the drivers to participate, the data reveal that preparers, accountants and
standard setters react significantly more when proposals have a major impact on the accounting
numbers of a company. Users, stock exchanges and their supervisory authorities write
significantly more comment letters when disclosure issues are at stake. Finally, participating
preparers in the IASB's due process are larger and more profitable than non-participating
preparers.
In conclusion Comment letters are the primary means by which interested individuals or
groups can communicate with the Board on its proposals. The Board relies on the comments of
those who prepare or audit financial statements for feedback on the conceptual soundness,
technical accuracy, and appropriateness of its proposals. Additionally, comments from users are
particularly helpful to the Board in understanding whether or not the information provided by the
proposals is useful in fulfilling the needs of those who use financial information

(Allen, A., Ramanna, K., Towards an understanding of the role of standard setters in
standard setting. Journal of Accounting and Economics (2012),