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IASB's potential future focus beyond private sector, for-profit entities

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Nov 27, 2015

On July 7, 2015, the Trustees launched the 2015 Constitution review. One of the questions asked was whether the IASB should extend its remit beyond the current focus of private sector, for-profit entities. With the comment letter deadline approaching (next Monday), two major positions emerge.

The proponents (among them AICPA, AASB, and MASB) argue from a conceptual viewpoint:

  • There clearly is a need for international financial reporting standards for private not-for-profit entities.
  • The IASB has the experience necessary for dealing with international standard setting.
  • Even though circumstances differ between the for-profit and the private not-for-profit sectors, fundamentally the economics are not sector-specific.
  • Standard setting across sectors and testing new concepts across all of them can result in better quality standards and decisions for the for-profit sector.
  • Some of the proponents even believe public sector standard setting should be included in the IASB's responsibilities for the same reasons.

The opponents (among them ASCG, ESMA, FRC, IFAC, Keidaren, and XRB) mostly argue from the cost perspective:

  • Even though most acknowledge the existing lack of and the potential need for international financial reporting standards for private not-for-profit entities, they are not convinced that this means the IASB has to step in.
  • There are still significant gaps in financial reporting for listed entities that need to be addressed first.
  • The IASB simply doesn't have the funds and resources to take on additional responsibilites.
  • Changes to scope would also likely mean that changes would need to be made to the oversight arrangements, IASB membership and competencies, staff competencies and resources, and Advisory Council membership.

Comment letters on the 2015 Constitution review made available publicly so far are on the IASB's Web site.

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