1. Whether the objectives of the IASC Foundation should expressly refer to the challenges facing SMEs
The members believed that the issues of SMEs should be considered by the IASB, but questioned the inclusion of such a requirement in the constitution. The overall belief of the members was that if the constitution were to include such a reference, that reference should not be in the paragraph discussing rigorous application (as proposed). That is, regardless of the standards that apply to an entity, they should all be applied with rigour.
2. Number of trustees and their geographical and professional distribution
The trustees have proposed equal representation from North America, Europe, and Asia/Oceana regions. Some members suggested that the constitution not include any specific criteria, but require the selection of the best people. Others argued that the regions that apply IFRS should be represented more than North America. Members were concerned that excluding North America would send a message that convergence was not important – which was not the belief of most members. That is, involvement in the process will create interest to "join the game".
Members also noted that the purpose of financial information is for users and, therefore, the regions with the most dominant capital markets should be equally represented. There was also a suggestion to add trustees with backgrounds as regulators to the requirements in the constitution.
The subcommittees briefly discussed how trustees were selected. The current IASCF Chairman expressed concern that the process was already burdensome and that adding more requirements seemed unnecessary. One member suggested appointing a nominating committee (without much support).
3. The oversight role of the Trustees
The trustees had recommended that the constitution be amended to include a requirement to "carefully consider the IASB's agenda". The members expressed concern with understanding exactly what is meant by that phrase and asked the wording in the constitution to be expanded. The IASCF Chairman noted that the trustees would not have veto power over agenda items, but would require the IASB to review the agenda items with the trustees on a regular basis. The intention of the trustees was to require the IASB to bring a potential agenda item to the trustees for positive approval. It was also suggested that the trustees could require the IASB to add an item onto its agenda. There was general consensus that the Trustees role in relation to the agenda should not be strengthened to the point of approval, but should be just short of that line.
Some members expressed concern that the current IASB members do not consider the practical implementation issues related to its proposals. There was consensus that the trustees should monitor this issue actively with each project.
Several members strongly encouraged the trustees to reconsider whether it should undertake educational activities. There were questions over due process, the costs needed to build up the infrastructure, and the ability to have appropriate review by the trustees (since supposedly the IASB staff would not be used). The trustees were surprised by the level of concern and countered that if the trustees do not undertake these activities, interpretations around the world could differ. The members noted that there is nothing the trustees can do to prevent this – including issuing training materials. The staff noted that the IASB is currently developing 2-page summaries of its standards targeted to CFOs. One CFO at the table stated that he already gets those summaries from the Big 4 Firms – why does he need another one from the trustees?
4. Funding of the IASC Foundation
The IASCF Chairman asked for any bright ideas on how to raise funding. The only alternative discussed was whether it was feasible to implement a fee-based structure with the exchanges. One member also suggested a nominal fee for all purchases of securities over a certain amount. The concern was that any of these suggestions would have to be implemented by changing local laws.
5. The composition of the IASB
The Trustees recommended keeping 14 Board members, but allowing between 2 and 4 part-time members. There was general agreement with this approach as some noted that the part-time member from the accounting profession added significant quality and real life experience to the Board.
Some members expressed concern about the composition of the Board with 10 of 14 being "Anglos". In addition, six come from countries that don't apply IFRS. The majority of the members believe membership of the IASB should be based on competence and not nationality.
6. The appropriateness of the IASB's existing formal liaison relationships
There was general support for maintaining the requirement in the constitution to have liaison relationships. There was support, however, for ensuring the constitution remains flexible to change as situations change. One European member suggested that EFRAG replace the European national standard setters in the liaison relationships. The IASCF Chairman noted this would make it much easier and was open to pursuing this suggestion.
7. Consultative arrangements of the IASB
The trustees expressed concern with cluttering up the constitution with due process issues. There was a suggestion that field tests (as distinct from merely field visits) should be mandatory on all projects. While there was not general support for making field tests mandatory, there was general agreement that field tests should be used more often. Several members suggested the IASB must validate to the trustees why it did not use field tests.
Concern was raised that the current activities of the IASB do not consider the difficulties raised by users of IFRS having different language requirements. For example, 3 months is too short for a comment period as exposure drafts are not translated in time. The IASCF Chairman expressed concern about the cost of translation. There was general agreement that the cost of being an international organisation includes the cost of ensuring those companies applying IFRSs can fully understand IFRSs.
8. Voting procedures of the IASB
The Trustees have proposed changing the voting requirements from a majority (8 members) to requiring the vote of 9 members. There was no objection to 9; however, one member suggested raising the requirement to 10. There was little support for this suggestion.
9. Resources and effectiveness of the International Financial Reporting Interpretations Committee (IFRIC)
The members recognised there is concern over IFRIC, but were not sure there was anything that related to the constitution. One member raised the question of whether IFRIC interpretations should be exposed. The general belief around the table was that recent experience suggests exposure should continue to be required.
10. The composition, role, and effectiveness of the SAC
The subcommittee of the SAC presented draft recommendations to the trustees in how to improve its process. There was general concern that SAC was not operating effectively, and therefore as a result, the IASB was not receiving advice in a useable manner. The reasons for this were various and include the size of SAC, the chairmanship of SAC, etc. The SAC members suggested the SAC develop a charter that would govern its activities and submit that charter to the trustees for approval.
There was general agreement with this approach. In addition, there was general agreement the chairman of SAC should not an IASB member, but should be a paid position for either a part-time or full time individual. This issue will be discussed at a future trustees meeting.
This summary is based on notes taken by observers at the meeting and should not be regarded as an official or final summary.