Feedback statement on the consultation regarding the creation of the ASAF and call for nominations

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01 Feb, 2013

The IFRS Foundation has today published a feedback statement analysing comments received in response to its public consultation paper regarding the creation of the Accounting Standards Advisory Forum (ASAF). The feedback received has also been considered in the membership criteria in the call for nominations also issued today, the proposed terms of reference and the proposed Memorandum of Understanding to be signed by the ASAF members.

The feedback statement opens with acknowledging the general support the proposal to create the ASAF has received. Of the more than 60 comment letters received by the IFRS Foundation only two did not support the creation of the ASAF. Therefore, the IFRS Foundation feels encouraged to move forward with establishing the ASAF quickly (even though acknowledging that the timetable is an ambitious one, as many respondents had claimed) and aims at having a first meeting of the ASAF at the beginning of April 2013.

Four main points mentioned in the feedback statement deserve special attention:

  • Remit of the ASAF: Although there had been calls to broaden the remit of the ASAF, the IFRS Foundation made clear that the ASAF should focus on the technical standard-setting activities of the IASB; bringing issues to the table that are not currently on the IASB’s agenda but that might be under consideration by individual national-standard setters (NSS) should be limited to those that could have major implications for the IASB’s work. Also, it was reiterated that the role of the ASAF would be purely advisory.
  • Size and composition of the ASAF: Many respondents had called for the size of the ASAF to be extended. There had been calls for additional seats for certain regions and calls for additional seats for certain groups of NSS (for example emerging markets) as well as calls for generally increasing the size to allow more NSS to participate. The fact that the ASAF will be a non-voting body increases the importance of discussions. The IFRS Foundation therefore believes that the membership of the ASAF should be kept to 12 to insures all voices can be heard. The IFRS Foundation also intends to stay with the suggested composition (3 seats each for the Americas, Asia-Oceania and Europe (including non-EU), 1 seat for Africa and two at large seats) arguing that the at large seats offer enough flexibility. Both the size and the composition will be re-examined as part of the two-year review of the ASAF.
  • Commitment of the ASAF members and Memorandum of Understanding: The suggested Memorandum of Understanding (MoU) that was intended to prove the commitment to the cause of a single set of international accounting standards caused much debate. Comments ranged from requiring that no express commitment should be demanded (joining the ASAF would already prove commitment) over asking that the terms of the general MoU should be more general (in order not to exclude jurisdictions that cannot meet all criteria) to advocating even stricter conditions (including a commitment to adopt and endorse). Respondents also remarked that the question of commitment was directed only towards the ASAF members while it seemed that the IFRS Foundation would not be obliged to make any commitments. The IFRS Foundation has therefore included commitments of the IFRS Foundation in the proposed MoU. Most importantly these are a commitment to actively engage with the ASAF and to ensure that its views and feedback are faithfully and fully presented to the IASB and a commitment to respect the independence of ASAF members.
  • Membership criteria: The respondents had raised many questions regarding the suggested membership criteria. Among these were the question whether regional groups should become ASAF members even if they are not standard-setters themselves and the question whether non-adopters of IFRSs should be able to become members. The call for nominations issued today expressly invites the four major regional groups (AOSSG, EFRAG, GLASS and PAFA) to become members of the ASAF. Regarding the question of non-adopters, the feedback statement says: "While the use of IFRSs is an important factor for membership, it is not the only one."

The feedback statement features two appendices: Appendix A Accounting Standards Advisory Forum: Proposed terms of reference/ Charter and Appendix B Accounting Standards Advisory Forum: Proposed Memorandum of Understanding.

Together with the feedback statement, the IFRS Foundation has issued a Call for Candidates, inviting nominations for membership of the Accounting Standards Advisory Forum (ASAF) under the conditions outlined above.

Since there had been fears that, especially because of its suggested size and the fact that many groups and standard-setters were already regarded as set candidates, the ASAF would be a very exclusive group depriving other standard-setters of direct contact with the IASB, Michel Prada, the Chairman of the IFRS Foundation Trustees, commented:

The ASAF will be an important group, but it should not be an exclusive group. Even though we expect to have representatives from the main regional groupings and other jurisdictions around the ASAF table, we will continue to maintain dialogue with other accounting standard-setters around the world and to work with them on research projects, implementation challenges, outreach activities, field testing and Postimplementation Reviews. We will continue to welcome secondees from such standard-setters and to seek their advice on a range of issues.

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