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Conclusions on governance and strategy review of IFAC member bodies

  • IFAC (International Federation of Accountants) (lt gray) Image

Apr 02, 2013

The Monitoring Group and Public Interest Oversight Board (PIOB) have published documents in response to their March 2012 consultation documents on the governance of various organizations operating under the auspices of the IFAC. The reports outline a number of recommendations in relation to the governance and strategy of the various IFAC bodies, but does not make any recommendations on the governance of the International Public Sector Accounting Standards Board (IPSASB). The Monitoring Group has formally taken the question of IPSASB oversight onto its agenda, noting "its [own] composition and that of the PIOB currently are not appropriate to the needs of stakeholders in public sector accounting standards."

Monitoring Group Statement on Governance

The members of the Monitoring Group are the Basel Committee on Banking Supervision, European Commission, Financial Stability Board (FSB), International Association of Insurance Supervisors (IAIS), International Forum of Independent Audit Regulators (IFIAR), International Organization of Securities Commissions (IOSCO), and the World Bank. One of the objectives of the Monitoring Group is to ensure appropriate public accountability of IFAC's standard-setting bodies, namely the International Auditing and Assurance Board (IAASB), the International Ethics Standards Board for Accountants (IESBA), the International Accounting Education Standards Board (IAESB), and the Compliance Advisory Panel (CAP).

The Statement on Governance outlines the following recommendations:

  • Standard-setting board meeting materials should clearly note the public interest concerns and needs identified by public constituents.
  • The standard-setting boards should establish (1) procedures to ensure that all standard-setter board members are aware of and understand concerns conveyed by Monitoring Group members over the course of a standard-setting project and (2) a mechanism for feedback to Monitoring Group members on resolution of the Monitoring Group member concern.
  • The PIOB should establish procedures to ensure that it is aware of any issues conveyed by a Monitoring Group member and other stakeholders that rely on the work of an auditor.
  • The PIOB shall improve transparency of its oversight activities, to both the Monitoring Group and the public.
  • The Monitoring Group is to expand its efforts to improve the quality of its discourse with the PIOB and public transparency of its activities.

In relation to the question of IPSASB oversight, the Monitoring Group's consultation paper asked for constituent views on whether the IPSASB should be included within the ambit of the existing Monitoring Group/PIOB governance framework, which would see PIOB oversight of the IPSASB. However, there were divergent views on whether this approach was appropriate. In particular, concerns were expressed that for the Monitoring Group and PIOB to take on this role, they would need to review their own composition and size to ensure both the old and new responsibilities could be appropriately carried out, given the current oversight focus on audit-related standards. Further comments were made around the overall structure and funding of the IPSASB.

Responding to constituent feedback, the Monitoring Group convened a roundtable in February 2013 to further discuss governance with stakeholders in public sector accounting standards. The Monitoring Group has released a summary of the roundtable in conjunction with the Statement of Governance. The summary discusses various issues surrounding the IPSASB governance, including the need for legitimacy, the nature the stakeholders to be involved in public sector standard setting and oversight, and a lack of progress on addressing the issue. The summary also notes the IFRS Foundation has "concluded that, at this time, it will not add public sector accounting standards to its organizational remit" and the recent G20 actions in this area involving the International Monetary Fund (IMF) and World Bank.

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PIOB recommendations

The Public Interest Oversight Board (PIOB) report, PIOB recommendations in response to its consultation on the PIOB work program 2012 and beyond, provides a summary of each question asked in the PIOB's consultation, along with a summary of comments received and the PIOB's conclusions. Some of the recommendations include (reproduced from the report):

  • The PIOB will endeavour to engage stakeholders more actively with a view to enhancing its awareness of their concerns regarding standard setting in the fields under its mandate
  • The PIOB will work with IFAC and the chairs of the standard-setting boards to expand the content and use of feedback reports to enhance the transparency of due process
  • The PIOB will work with IFAC and the chair of the nominating committee to explain better the workings of the nomination process
  • The PIOB in developing its opinion on the public interest will increase its consultations with the MG as well as with a broad range of stakeholders
  • The PIOB will improve the transparency of its oversight functions: it will disclose its meeting agendas, will continue to provide summaries of its meetings in a timely manner with a better description of the decisions adopted and an indication of the discussions held, and will disseminate this information more effectively by electronically circulating a quarterly update.

Click for PIOB recommendations in response to its consultation on the PIOB work program 2012 and beyond.

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