Joint meeting of the Monitoring Board and the IFRS Foundation Trustees
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.
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.