IASB and IFASS agree on Charter

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07 May, 2014

The International Accounting Standards Board (IASB) and the accounting standard-setters that participate in the International Forum of Accounting Standard Setters (IFASS) have agreed to a Charter that clarifies the IASB's working relationship with other accounting standard-setters.

The purpose of the Charter is to establish some key principles of co-operation between the IASB and other accounting standard-setters that are designed to enhance the efficiency and effectiveness of international accounting standard-setting. The overarching principles of the Charter reflect that the parties involved are committed to work together (1) in close cooperation, while respecting each other's independence, (2) transparently and openly, (3) with mutual trust and respect, and (4) with a sense of duty, responsibility and accountability for achieving a shared goal in the public interest.

The Charter defines the following responsibilities:

The IASB commits to:

  • actively engage with other accounting standard-setters and ensure that their views and feedback are faithfully and fully presented to the IASB as a substantive part of stakeholder outreach;
  • provide the necessary liaison, communication and support between the IASB and other accounting standard-setters;
  • respect the independence of other accounting standard-setters, recognising that they operate under their own specific jurisdictional mandates; and
  • develop its outreach and fieldwork activities in as close co-operation as possible with other accounting standard-setters so as to limit the cost of consultation for constituents, insofar as its independence permits.

The accounting standard-setters commit to:

  • support and contribute to the IASB's role in the development of high quality, understandable, enforceable and globally accepted financial reporting standards;
  • encourage input from constituents within their jurisdiction/regions, either to themselves or to the IASB directly, on the technical standard-setting activities of the IASB so that the IASB is in a position to understand all input relevant to its projects;
  • periodically exchange information on the progress in the use of IFRS within jurisdictions around the world, to sustain a credible updated data base; and
  • respect the IASB's independence, by ensuring that their activities do not compromise or challenge the independence and integrity of the IASB and its duty to be the final authority on IFRS.

The IASB stresses that the Charter is consistent with the creation in 2013 of the IASB's Accounting Standards Advisory Forum (ASAF), which serves as a formal platform for technical dialogue between the IASB and representatives of the accounting standard-setting community. The Charter also notes that it is a statement of co-operation that relies on the good faith and best endeavours of the parties and not a binding contractual arrangement.

At the recent IFASS meeting during which the Charter was agreed, the national standard-setters also finalised a 'Model for National Standard-Setters' that is designed to provide a basis for a national standard-setter to maximise its contribution to the quality of general purpose financial reporting by participating in the development of high-quality global accounting standards issued by the IASB. The model sets out concepts that should underlie the activity of accounting standard-setting and the key characteristics to which standard-setters might aspire. It is written primarily for standard-setters in jurisdictions have already adopted IFRSs or are in the process of doing so, but it is noted that the model can also be used by standard-setters in other fields and by bodies that monitor, fund or oversee a standard-setter in order to evaluate its activities.

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