Trustees aim at limited Constitution review

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02 Oct, 2014

Among the agenda papers released for the upcoming meeting of the IFRS Advisory Council, which is being held in London on 13-14 October 2014, is a paper on the upcoming review of the structure and effectiveness of the IFRS Foundation.

The IFRS Foundation Constitution requires the IFRS Foundation Trustees to undertake a review of the entire structure of the IFRS Foundation and its effectiveness every five years. After Constitution reviews in 2003-2005 and 2008-2010, the IFRS Foundation Trustees announced in February 2014 that they intend to start their next review of the structure and effectiveness of the IFRS Foundation in 2015. Purpose of the session at the Advisory Council meeting is to update the Advisory Council members on the progress of preparatory work for the review and to seek initial views and suggestions from Advisory Council members.

The paper available on the IASB website details at length the outcomes of previous reviews. It also mentions, that the last strategy review (2010-2012) covered many issues that would be part of a Constitution review. The paper states: "Trustees do not propose to re-run whole of that review" and "Existing three-tier structure supported by constituents in the last Strategy Review: do not propose to revisit".

Among the suggested topics for the upcoming review are:

  • Structure
    • operation of the current structure
    • effectiveness of the Interpretation Committee’s more prominent role since 2012
    • output of the 2013 self-assessment of the Advisory Council
  • Remit
    • public sector accounting
    • relationship with wider reporting
    • relationship between purpose of financial reporting standards and other public policy objectives
  • Other
    • funding
    • governance procedures
    • assessing how the IFRS Foundation matches up against other standard-setting and regulatory organisations

As communicated earlier, the review will also include a review of the optimal size of the International Accounting Standards Board (IASB).

Not mentioned among the topics for the upcoming Constitution review is a review of the Accounting Standards Advisory Forum (ASAF), even though the ASAF's Terms of Reference require such a review 'two years after the establishment of the group'.

Given this more limited set of topics, the Trustees believe that unlike during the earlier Constitution reviews only one round of public consultation will be needed this time. It is expected to take place in first half of 2015.

Please click for the agenda paper for the Advisory Council meeting on the IASB website.

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