Formation of the Monitoring Board
At a meeting on 15 and 16 January 2009 in New Delhi, India, the (then) IASC Foundation Trustees approved amendments to the (then) IASCF Constitution effective 1 February 2009. These amendments included the formation of a Monitoring Board comprising public authorities in order to replicate the relationship that has generally existed in national identities between accounting standard-setters and capital market authorities.
The primary purpose of the Monitoring Board is to serve as a mechanism for formal interaction between capital markets authorities and the IFRS Foundation, thereby facilitating the ability of capital market authorities that allow or require the use of International Financial Reporting Standards (IFRSs) in their jurisdictions to effectively discharge their mandates relating to investor protection, market integrity and capital formation.
The goal is to enhance public accountability of the IFRS Foundation while not impairing the independence of the standard-setting process.
The responsibilities of the Monitoring Board are:
- to participate in the process for appointing IFRS Foundation Trustees and to approve the appointment of Trustees according to the guidelines set out in the IFRS Foundation Constitution.
- to review and provide advice to the Trustees on their fulfilment of the responsibilities set out in IFRS Foundation Constitution. The Trustees will make an annual written report to the Monitoring Board.
The Monitoring Board initially comprises the relevant leaders of:
- The European Commission
- The Japanese Financial Services Agency
- The US Securities and Exchange Commission
- The Emerging Markets Committee of IOSCO
- The Technical Committee of IOSCO
The chairman of the Basel Committee on Banking Supervision is a non-voting observer.
IFRS Foundation Trustee nominations and appointments
The Monitoring Board participates in the nomination process for the IFRS Foundation Trustees, including approval of the Trustees' procedures for soliciting nominations and submitting names of candidates to the Trustees.
The Monitoring Board approves each appointment to the IFRS Foundation Trustees.
The Monitoring Board must approve the selection of the Chairman of the IFRS Foundation Trustees. The Trustees themselves nominate a candidate.
Oversight of the IFRS Foundation and the IASB
The Monitoring Board has oversight responsibilities in relation to the Trustees and their oversight of the IASB's activities of the International Accounting Standards Board (IASB), in particular the agenda-setting process and the 'IASB's efforts to improve the accuracy and effectiveness of financial reporting and to protect investors'.
The Monitoring Board 'may refer accounting issues to, and will confer regarding these issues with, the Trustees and the IASB Chair'. The Monitoring Board may request a meeting with 'the Chairpersons of the Trustees and the IASB'.
'If the IASB determines that consideration of the issue(s) identified by the IFRS Monitoring Board is not advisable or that the issue(s) cannot be resolved within the time frame suggested by the Monitoring Board, the Trustees should:
- Call on the IASB to undertake all reasonable efforts to consider issue(s) in a manner that is consistent with the public interest, taking into account the protection of investors
- Call on the IASB to explain its position through the Trustees regarding the IASB's position on the issue(s)
- Promptly notify the IFRS Monitoring Board of the IASB's position.
The Monitoring Board's oversight responsibilities do not alter the terms of the relationship between the Trustees and the IASB. Nor do those responsibilities alter the Trustees' responsibilities as described in the IFRS Foundation Constitution.
The Monitoring Board reviews the adequacy and appropriateness of Trustee arrangements for financing the IASB.
The Monitoring Board confers with the Trustees regarding their responsibilities, in particular in relation to the regulatory, legal, and policy developments that are pertinent to the IFRS Foundation's oversight of the IASB.
Memorandum of Understanding
The IFRS Foundation also released a Memorandum of Understanding (MoU) related to the Monitoring Board.