The IPSASB Governance Review Group consists of members from the International Monetary Fund (IMF), Organization for Economic Cooperation and Development (OECD), the World Bank, Financial Stability Board (FSB), the International Organization of Securities Commissions (IOSCO) and the International Organization of Supreme Audit Institutions (INTOSAI). The Review Group published its proposals in January 2014.

In our comment letter, we note that the sovereign debt crisis has placed increasing importance on the review of the governance of the IPSASB, and support the ongoing work of the IPSASB in establishing high-quality accounting standards for the public sector. In supporting the objective of bringing the IPSASB's governance within the governance framework of the IFRS Foundation, we believe the oversight and monitoring provided by the IFRS Foundation Trustees and IFRSF Monitoring Board would strengthen the IPSASB's independence.

Whilst we acknowledge that the 2010-2012 Strategy Review of the IFRS Foundation Trustees concluded that the short-term primary focus of the IFRS Foundation and the International Accounting Standards Board (IASB) should remain on developing standards for for-profit corporate entities, we think that it is appropriate to revisit this conclusion within its own due process arrangements. We note that the IFRS Foundation has announced a Strategic and Operational Review that will commence in 2015, and believe this would give the IFRS Foundation Trustees an opportunity to begin the discussion about bringing oversight of the IPSASB within its ambit. In the meantime, we support the IPSASB remaining under the auspices of the International Federation of Accountants (IFAC) to allow its standard-setting activities to continue within existing funding arrangements.

In terms of the potential impact on the membership of the IFRS Foundation Trustees, our comment letter notes the following:

In our view, the IFRS Foundation Trustees would be able to provide appropriate oversight of the work of the IPSASB, given that at least half of the Trustees have public sector/public policy experience. As such, we think that the Trustees already possess a broad understanding of the needs of users of public sector accounts. Any actual or perceived deficiencies could be addressed as new Trustees are appointed.

Similarly, we do not believe issues with membership and remit of the Monitoring Board are insurmountable as it "already represents the public interest (the members being primarily public authorities), and capital markets under their supervision are accessed by governments and other public sector entities".

We however note concerns regarding the impact on funding of an expanded IFRS Foundation:

More problematic might be funding expanded operations of the IFRS Foundation, if it is to address public sector standard-setting. The IFRS Foundation has struggled to establish a stable, independent funding base for its current private sector activities: adding public sector responsibilities could strain the funding challenges still further. Any involvement of IFAC Member Bodies in funding the IPSASB would likely be as contentious as it was when the IASC was being restructured in 1998-2000, and would need to be severed if the IPSASB were to be held to the same standards of independence as the IASB.

Notwithstanding these concerns, we believe that a common governance framework and due process, together with likely staff resource synergies, may represent a less significant incremental cost than establishing the IPSASB as a separate standard-setter, an option we see as "challenging at present and sub-optimal in the long run".

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