Monitoring Board publishes revised versions of its Charter and the Memorandum of Understanding with the IFRS Foundation

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31 Oct, 2013

The Monitoring Board, responsible for oversight of the IFRS Foundation, has published revised versions of its Charter and the MoU that defines its relationship with the IFRS Foundation. Most importantly the membership criteria and a description of assessment processes and consequences regarding the periodic review of existing members were added to the Charter as Appendix A and Appendix B.

The Monitoring Board's Final Report on the Review of the IFRS Foundation's Governance published in February 2012 identified a number of enhancements to the governance framework including expanding the Monitoring Board’s membership and beginning periodic assessments of the members against membership criteria yet to be developed. The criteria and the assessment processes were finalised at the Monitoring Board’s 6 February 2013 meeting and communicated in a press release in March 2013.

The criteria for (continued) membership that have now been formally added to the Charter are:

  • The jurisdiction has made a clear commitment to IFRSs and promotes global acceptance of a single set of high quality international accounting standards. It mandates or permits the application of IFRSs to consolidated financial statements of companies raising capital in its relevant market.
  • The IFRSs to be applied are essentially aligned with IFRSs developed by the IASB.
  • The jurisdiction can be regarded a major market for capital-raising in the global context.
  • The jurisdiction makes financial contributions to the setting of IFRSs on a continuing basis.
  • The jurisdiction has in place and in operation a robust enforcement mechanism.
  • The relevant national or regional standard-setting body actively contributes to the development of IFRSs.

In addition, a note added to Appendix B (Assessment Processes and Consequences) clarifies:

The Monitoring Board will evaluate the mechanisms used in member jurisdictions to integrate IFRSs into the reporting regimes for domestic issuers and the extent to which they contribute to the prominence of IFRSs in the member’s capital market, beginning with the 2016 periodic review of members against the membership criteria.

Changes to the MoU mainly concern the selection of the IASB Chair. An additional duty "Provide input on the IASB Chair selection" has been included in the section describing the duties of the Monitoring Board and the following description of how the Board will discharge of this duty has been added:

  • The IFRSF Trustees have the ultimate responsibility for selecting the IASB Chair.
  • The IFRSF Monitoring Board will agree with the Trustees on a set of criteria for selecting potential candidates, which will be documented and made public.
  • The IFRSF Monitoring Board will submit to the Trustees its assessment of a short list of candidates against the criteria, for the Trustees’ reference.

Moreover, in cases where the IASB determines that consideration of issues identified by the IFRSF Monitoring Board is not advisable or cannot be resolved within a reasonable time frame, it is no longer enough that the IASB explains its position, it will now also be called upon to demonstrate to the Trustees and the Monitoring Board "that adding the matter to the IASB agenda would be inconsistent with the standard-setting responsibilities established in the IFRSF Constitution".

Please click for the press release on the IASB's website offering access to all relevant documents (including the superseded versions) or go to the revised Charter and revised MoU directly.

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