(See Peter Clark’s commentary on the following [evidently even more flawed than usual!] post)

This is from the article No Comment: Language Barriers and the IASB’s Comment Letter Process, by Eduardo Flores, Brian Monsen, Emily Shafron and Christopher G. Yust:

• Even though over 90 percent of the countries that use IFRS do not use English as their primary language, proposed standards are currently issued in English and, at most, three additional non-English languages, and all comment letters must be submitted in English.
• If these linguistic frictions prevent the IASB from obtaining diverse, global feedback, they may impede the development of IFRS, resulting in sub-optimal financial reporting outcomes for some stakeholders. Further, these frictions may result in an apparent, even if unintentional, bias toward certain stakeholders. The perception of such bias may harm the IASB’s reputation as a globally-accepted standard setter that integrates global feedback through an inclusive process.
• Language barriers may also result in comment letters from linguistically distant stakeholders receiving less consideration from the IASB staff and board members. The IASB received over 100 comment letters on average for each exposure draft, and it has finite resources to read and process them. Language barriers can reduce writing quality, making comment letters harder to understand and lowering evaluations of their quality and informativeness. Language barriers can also make it harder for non-English speakers to express unique ideas, meaning that their comment letters may be less likely to convey important jurisdictional nuances the IASB is unlikely to hear from other stakeholders.

The authors carried out a study based on cataloging over 10,000 comment letters related to 88 different exposure drafts, finding that “the existence and magnitude of a language barrier are associated with (1) a lower likelihood that any comment letters are submitted and (2) fewer total comment letters submitted from a given country. Thus, the IASB is less likely to receive feedback on proposed standards due to language barriers. Notably, geographic representation at the IASB board and staff levels reduces the effect of these language barriers.” The study also found that “some evidence that comment letters from linguistically distant stakeholders are less likely to be quoted in the summary document (prepared by IASB staff for the board)” concluding that “the comment letters that linguistically distant stakeholders submit appear less likely to affect the final accounting standards.”

On his Accounting Miscellany blog, Peter Clark reviewed the study, finding some of it not too surprising and some of it unconvincing, noting that direct verbatim quotation from comment letters plays little to no role in the IASB’s process (because the comment summaries submitted to Board members would seldom include such quotations). He suggested that “there is a more useful question to ask, though finding the evidence to answer that question would probably consume much more time. The IASB staff play a key role in capturing, aggregating and summarizing the points made in comment letters and conveying it in Board papers. They do this both in the initial comment letter summary and, maybe more importantly, in papers for the later discussions. Is there any evidence that linguistic distance leads to a staff paper omitting or distorting a significant argument?”

It seems to be taken as a given that Board members would seldom if ever see the comment letter themselves, relying mostly or completely on those staff summaries. No doubt this is a practical accommodation to time and energy constraints, but as I wrote here, the lengthy and deeply-considered submissions from some respondents (whatever their degree of stylistic eloquence) may deserve better than to be boiled down into a relatively brief synopsis of what “most respondents” versus “a few respondents” had to say on the main points. For example, on the current post-implementation review of IFRS 15, the request for information specifies that comments are most helpful if, among other things, they describe fact patterns relevant to the questions and explain how the IFRS 15 requirements are applied, the effects of applying the requirements (for example, the quantitative effect on an entity’s financial statements or an operational effect) and how pervasive the fact pattern is; and also if they are supported by evidence. In other words, the most helpful comments might take a fair bit of writing and compiling, along with (by virtue of the comment letters all being posted on the website) an acceptance of transparency. But there’s no way of knowing whether the IASB’s degree of engagement with such submissions (even at the staff level, let alone that of the Board) is equal to the effort put into them. In contrast, imagine that, at the conclusion of a project, each comment letter – or at least each one meeting a certain quality threshold – were to be individually acknowledged on the website with a brief summary of how its main points were reflected in the Board papers and in the project’s ultimate outcome. Of course this would be much more work for the staff, but arguable not disproportionately to what’s requested of those making the submissions. And yes, I realize there’s no chance of this ever happening.

Anyway, it seems that if “linguistic distance” doesn’t necessarily impede the chances of your much labored-upon comment letter being read and relished by the Board, that may only be because those chances barely existed in the first place…

The opinions expressed are solely those of the author.