The International Accounting Standards Board (IASB) is tasked with developing high-quality accounting standards used by over 150 countries. The IASB’s success relies heavily on global feedback, as it actively seeks comments on proposed standards from its stakeholders worldwide.

However, a recent study published in Contemporary Accounting Research by Mays Business School associate professor Christopher Yust and assistant professor Emily Shafron, alongside Brian Monsen of Ohio State University and Eduardo Flores of University of São Paulo in Brazil, identifies a critical challenge: language barriers significantly limit broad international stakeholder participation and influence in the IASB’s standard-setting process.

The Global Participation Challenge

While over 150 countries use the International Financial Reporting Standards (IFRS) set by the IASB, English remains the dominant language in the standard-setting process. IASB relies heavily on global feedback through comment letters to develop high-quality standards; however, the research reveals that linguistic distance — the difference between English and other languages — creates significant barriers to participation.

Using a Language Friction Index to quantify the severity of a language barrier, the researchers found that countries with languages more distant from English show consistently lower participation rates in the standard-setting process. This reduced engagement extends beyond comment letters to other communication channels, such as participation in the IFRS Advisory Council.

Measuring the Impact

When stakeholders in linguistically distant countries do submit comment letters, their submissions have less impact. The study found that these letters are quoted less frequently in IASB comment letter summaries, which are the primary source used by the Board to deliberate constituent feedback, indicating a reduced influence during the redeliberation process.

The study also found that stakeholders in countries where English is not widely spoken face challenges in both understanding complex accounting terminology and crafting high-quality responses. Their letters often demonstrate lower writing quality and originality, further diminishing their influence and contributing to a cycle of reduced participation and impact.

Current Efforts and Suggested Strategies

To address these challenges, the IASB has increased the geographic representation of its Board members and staff and has supported translations of proposed guidance. These measures have led to increases in comment letter participation from countries that have greater access to the IASB through these channels. However, the study also notes that these translations remain limited, and broader efforts are needed to address language barriers to further increase participation by all constituents.

The study suggests several strategies to enhance global participation:

1. Expand Translation Efforts: Providing translations for proposed guidance in additional languages could reduce barriers for more non-English-speaking stakeholders.
2. Diversify Representation: Hiring more geographically diverse Board members and staff could help bridge communication gaps.
3. Simplify Language: Using plain English in exposure drafts could make the content more accessible to non-native speakers.
4. Leverage Technology: Expand research on how AI-driven translation tools could offer real-time support for stakeholders drafting comment letters in their native languages.

Broader Implications for Accounting Standards

The study underscores the importance of equitable participation in global standard-setting. When language barriers exclude certain stakeholders, the resulting standards may fail to reflect diverse perspectives, limiting their applicability and acceptance across different regions.

For example, businesses in linguistically distant countries may struggle to implement IFRS effectively if their unique challenges are not considered during the standard-setting process. This could undermine the IASB’s goal of creating truly global accounting standards.

For policymakers and standard-setters, the findings emphasize the need to view language not just as a technical issue but as a fundamental aspect of equitable participation. Future policies should focus on creating more inclusive communication channels and ensuring diverse perspectives are heard and considered.

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