Exchange of views with the IFRS Foundation Trustees

Michel Prada opened by advising the Council on the status of the Foundation’s funding review.  Although public sponsorship is medium- to long-term goal, the pieces were not yet in place for a fully-independent and stable funding platform.  Consequently, the current three-pillar approach would continue: publicly-sponsored; private-sector; accounting firms.  The publicly-sponsored piece would be based on GDP (other indicators having been considered and rejected).  The IFRSF’s chief problem was how to convince IFRS-user countries to contribute. 

On the use of IFRSs in the US, there was not much to say.  He noted that there was new leadership at FAF, FASB and SEC and that it was too early to say very much.  Mr Prada noted the comments of Paul Beswick in a speech on 2 June 2013.

Mr Prada noted the release of the first batch of country profiles on the IFRSF’s website.  He also noted the on-going review of the EU IAS Regulation being conducted by Philippe Maystadt.  The IFRSF would be meeting with Mr Maystadt later in June.  While noting that the Maystadt review was wide-ranging, he recalled the G20 finance ministers reiterated commitment to global accounting standards in April 2013.

A Council member questioned whether the major audit networks’ funding issue (and perceptions of conflict of interest) would be addressed directly.  Mr Prada said that ‘yes, they would be’, but this issue was part of a longer-term conversation.  He recalled that in 2000, IOSCO had insisted on involving the major networks and that their contributions were seen as necessary and legitimate.  Another Council member suggested finding an international organisation (e.g., the UN) under whose auspices the IFRSF could sit.  [The Trustees have considered this.]

Bob Glauber (Vice Chair) noted three retirements from the IASB and their replacements: John Smith (replaced by Mary Tokar); Paul Pacter (replaced by Gary Kabureck); and Prabhakar Kalavacherla, who retires on 31 December 2013 (to be replaced by Sue Lloyd).

He noted the first Trustee to be appointed from the Middle East, Dr. Abdulrahman Al-Humaid, and the early retirement of Noriaki Shimazaki.  The appointment of a replacement for Mr. Shimazaki is in progress.  Aki Fujinuma (a Vice Chair and also from Japan)’s term expires in December 2013.  The prospect of having no Trustees from Japan was very worrying for Trustees, especially with a new government in Japan, which might be more receptive to wider use of IFRS.  With the agreement of the IFRS Monitoring Board, Aki has agreed to extend his term to September 2014.  Other Trustee vacancies were arising in Brazil and Australia, but the Trustees had already compiled an ‘impressive’ list of potential candidates.

David Loweth reviewed the activities of the Due Process Oversight Committee on behalf of Scott Evans, who was unable to attend the meeting.  The DPOC had conducted a comprehensive due process review of the insurance project in advance of the release of the ED.  It had undertaken a full ‘life-cycle’ review of IFRS 9 hedging document, taking the DPOC back to the 2008 ‘Reducing Complexity in Financial Instruments’ DP.  The DPOC had reviewed the post-implementation review of IFRS 8.  In the case of proposed IFRS 11 Education material, the DPOC was made aware by the IASB staff that the proposed material had over-stepped the line between helpful material and authoritative material and concurred with the staff’s proposed remedies.  The DPOC would undertake a full life-cycle review of the due process leading up to the forthcoming IFRS on revenue.