Mr Hoogervorst reviewed the developments in the IASB’s technical plan, especially progress on the major projects, during the last quarter.  Looking forward, he noted that the IASB was close to the end of the ‘convergence era’ and was turning its attention to replacing bilateral relations with more inclusive multilateral relations with groupings of national standard-setters or regional groupings of standard-setters .  This would ease communications and hopefully reduce the chances of non-endorsement in IFRS jurisdictions.  Notwithstanding the current state of progress towards incorporating IFRSs into the US domestic financial reporting infrastructure, Mr Hoogervorst was ‘very confident’ about the future of IFRS in the US: it is still “in the US’ interests to adopt IFRS’, he said.

Mr de Silguy (France) congratulated the IASB Chairman, noting that IFRS had deep-rooted momentum and that the more towards adopting IFRSs internationally was ‘irresistible.’

Mr Boersig (Germany) asked for clarification of the IASB’s reasons for introducing the ‘fair value through other comprehensive income’ category in IFRS 9.  Mr Hoogervorst noted that the motivation was twofold: it brought IFRS 9 closer to US GAAP; and it solved a potential problem for insurance companies adopting the forthcoming IFRS for insurance contracts.

Mr Lucy (Australia) echoed the comments about the effectiveness and leverage potential of working with regional groupings of national standard-setters, citing the Asia-Oceania Standard-Setters Group (AOSSC) as an example.

Mr Chung (Korea) highlighted a current concern (foreign currency translation) that the IASB has committed to research more deeply.  Mr Hoogervorst noted a presentation to the IFRS Advisory Council at the June 2012 meeting of the Council [this session was private and not open to observers], and said that the IASB was ‘getting on’ with the research necessary to support an agenda proposal..

Mr Cherry reported the results of the June meeting of the Advisory Council, noting that he was very pleased with how the revised formulation of the Council was working.  He noted that the 2012 intake of new members had received an induction session before the main meeting and that this had aided their participation.  2013 would see a relatively small turnover in membership, while 2014 would see a major turnover.

There were no questions.

Mr Sidwell, Chairman of the Trustees’ Due Process Oversight Committee reviewed the activities of his Committee over the last quarter.  He noted, in particular, the preparation of the draft Revised Due Process Handbook, which is currently out for public comment.  He also brought to the meeting’s attention various items of correspondence between the Committee and constituents.  This correspondence is available here: http://www.ifrs.org/DPOC/correspondence/correspondence.htm.

There were no questions.

Dr Pacter, Chairman of the IFRS for SME Implementation Group summarise the work of the SMEIG over the past 12 months, noting the considerable efforts undertaken to provide implementation guidance for countries that have implemented or are working to implement the IFRS-SME.  He noted, with varying degrees of dismay, the prospects for adoption of the IFRS-SME in Europe and the US.  He noted that the IASB had launched the first comprehensive review of the IFRS-SME (comments are requested by 30 November 2012).  Finally he asked the Trustees to approve the re-appointment of the members of the SMEIG for a two-year term, ending 30 June 2014.  The Trustees agreed.

There were no questions.  Mr Mackintosh commended the work that Dr Pacter had undertaken in developing and championing the IFRS-SME over many years.

The public session closed.

Masamichi Kono (Acting Chairman of the Monitoring Board), Chair of the IOSCO Board and Vice Commissioner for International Affairs, FSA (Japan) opened the meeting.

Changes in membership

Mr Kono noted various changes in membership on the Monitoring Board: Ferdinand Restoy (Spain) had resigned on his appoint to the Bank of Spain; Ryutaro Hatanaka (Commissioner of the Financial Services Agency, Japan) had been appointed in his place, but was represented at the meeting by David Wright, IOSCO Secretary General; Vedat Akgiray Representative of the IOSCO Emerging Markets Committee (Chair), Vice-Chair of the IOSCO Board and Chairman of the Capital Markets Board of Turkey was attending his first meeting; the US Securities and Exchange Commission was represented at this meeting by Ethiopis Tafara, Director of International Affairs.

Michel Prada, IFRS Foundation Chairman, summarised changes to the IFRSF Trustees since the last joint meeting in July 2011.  He noted that the new processes established by Monitoring Board and IFRSF Trustees jointly for the nomination, approval and appointment of IFRSF positions.

IFRS Foundation developments

Mr Prada also noted progress in implementing the governance changes requested by the Monitoring Board in its report of February 2012.  In particular, the separation of the roles of IASB Chairman and CEO of the IFRS Foundation had been effected.  Yael Amog had been appointed Executive Director of the IFRS Foundation and David Loweth had been appointed as Director of Trustees Activities, providing independent technical resources to the IFRSF Trustees.

The Trustees had initiated a survey to gather reliable information on how IFRSs are implemented word-wide.  This was a fact-finding exercise, not a ‘name-and-shame’ exercise.  The IFRSF wanted to understand how IFRSs are incorporated into the financial reporting systems in all jurisdictions that require or permit them.

Mr Prada also noted the following developments:

• The first Post-implementation review had been initiated with a Request for Information issued on IFRS 8 Operating Segments.
• The Trustees had concluded their review of the Interpretations Committee and were implementing the recommendations.
• A draft revised Due Process Handbook had been prepared and was on exposure for public comment.  At the same time the Trustees continue to improve due process and oversight, especially its responsiveness with constituents.
• The Trustees were seeking to improve and ‘possibly enlarge’ its working relationship with IOSCO.
• The committees and expert groups supporting the standard-setting activities of the IASB were being reviewed.
• The Trustees and the IASB were seeking better co-operation with national standard-setters.

IFRS Foundation funding

Mr Prada turned to financing the activities of the IFRS Foundation.  He noted that the while a majority of the IFRSF’s funding came through public authorities, a significant minority still came from private sources.  He noted that there was no single public authority funding model that could be applied to all jurisdictions and that the IFRSF had to rely on bilateral arrangements.  He challenged the Monitoring Board, saying that this was an area in which they, as public authorities, needed to help the IFRSF in putting sustainable funding systems in place.  The funding situation was worrying as the IASB was operating at a ‘close to break-even’ basis (see also below).

Monitoring Board developments

Mr Kono reviewed the main recommendations of the Monitoring Board’s governance review.  He noted the support for the current ‘three tier’ governance structure and the proposed extension of Monitoring Board from five to nine members.  The membership would be reviewed every five years.  A task force had been established to review criteria for membership and to identify possible membership candidates.  The Task Force’s report was expected ‘soon’.

Michel Barnier, EC Commissioner for the Internal Market, welcomed the conclusions of the Monitoring Board’s governance review and the IFRSF Trustees’ strategy reviews.  He noted that it was essential for stakeholders to see that the Monitoring Board and the IFRSF Trustees should be seen to working in a coordinated manner.  Mr Barnier welcomed the separation of the roles of the roles of IASB Chair and IFRSF Executive Director.  He also encouraged the IFRSF Trustees to apply the geographical distribution for the Trustees and the IASB in an ‘intelligent’ manner.  He suggested that the chairmen of the two groups should not be counted in the quotas.

IASB Chairman’s report

Hans Hoogervorst’s report was almost exactly the same as that provided to the IFRSF Trustees in the previous session.  There was no substantive discussion.

Due Process Oversight Committee Chairman’s report

David Sidwell summarised the activities of the DPOC, noting that there were no matters of concern to report to the Monitoring Board, notwithstanding the intense period of activity that the IASB had experienced since July 2011.

Mr Barnier welcomed this report, but noted that the effects studies issued by the IASB needed to improve as they did not reflect the degree of rigor expected by constituents, especially in the European Union.

IFRS Foundation financial statements and planning

Mr Prada discussed the 2011 financial statements and the 2012 budget for the IFRS Foundation.

Mr Kono noted that it was important that all countries met their annual financial commitments.

Other comments

Bob Glauber, IFRSF Trustee, echoed the earlier comments of Mr Barnier, thanking the Monitoring Board for an ‘increasingly efficient’ process for approving appointments to the IFRSF Trustees, the IASB and other Committees and Councils.

The public session of the meeting concluded.