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IPSASB governance review

Date recorded:

The Future Governance of the IPSASB

Jón Blöndal (Head of Division, Budgeting and Public Expenditures, OECD), Co-Chair of the IPSASB Governance Review Group made a presentation of the Group’s public consultation The Future Governance of the International Public Sector Accounting Standards Board, issued in January 2014. He presented the background to the consultation, including the current work of IPSASB. He moved to present the three options included in the consultation:

  • Bring the IPSASB under the IFRS Foundation and Monitoring Board structure;
  • Create external governance structures for the IPSASB, including an oversight board and appropriate public authority monitoring body; or
  • Keep IPSASB within the International Federation of Accountants, but establish a public sector oriented oversight body and a separate monitoring body

David Loweth added some views of the IFRS Foundation staff, noting that the IFRSF Trustees had not yet discussed the Review Group’s report.

Several Council Members noted that operational and financial considerations probably prevented bringing the IPSASB under the IFRS Foundation’s remit at present, although it was perhaps an ‘aspirational goal.’ Short-term challenges, particularly given the IASB’s current workload for private-sector standards, are such that attempting to alter the IFRS Foundation’s purpose now is unrealistic.

IFRSF staff also raised concerns about how to secure legitimacy for the IPSASs, given the lack of any political commitment to the standards. The consultation paper does not address the developments in Europe (the EC is proposing EPSASs, using IPSASs as the starting point). Monitoring, governance and oversight would not solve the basic issue of legitimacy, since public sector financial reporting (especially government) involves even greater ceding of sovereignty than private sector standards.

Mr Hoogervorst noted that bringing public sector standards within the IFRS Foundation would bring with it an increase in the politicisation of the standard-setting process.

Mr Prada, without giving away his own views, noted that the sovereign debt crisis had placed government financial reporting in the spotlight. He noted that while there are some similarities between private and public sector accounting issues, the public sector has activities—such as defence and social assistance—that might have no overlap.

The sense of the Council was that bringing the IPSASB under the IFRSF’s governance structure was not feasible in the short term, although it was, perhaps, a longer-term possibility. There are significant resource and financial constraints on the Foundation, but the topic should continue to be reviewed.

Mr Loweth thanked the Council for their views and noted that the IFRS Foundation Trustees would discuss this at their next meeting in April 2014.

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