Masamichi Kono (Japanese FSA), who is leading the Monitoring Board’s Governance Review working group reported that the group’s report is still in preparation and that final recommendations are now likely late in the third quarter or early fourth quarter 2011. He reported that the working group was assessing the input from 80 comment letters and comments received at four roundtable meetings with constituents. He gave highlights of the areas that had attracted most comment, but was unable to give any clear indications of what recommendations the working group would make. He reiterated the desire of the Monitoring Board to coordinate its final recommendations with those of the Trustees so that a comprehensive reform package could be presented.

That said, it is likely that the Monitoring Board will be expanded to include both long term and rotating seats and that the Basel Committee may be invited to be a voting member. Whether other non-capital market authorities would be invited is in the ‘still to be debated’ category.

There was general agreement that the Monitoring Board, acting in that capacity, should not have special access to the IASB in agenda-setting matters (although there was a minority that did support some enhanced role); nor should the Monitoring Board approve appointment of the IASB Chair. There was almost no support for the establishment of a permanent secretariat.

Robert Glauber (Interim Co-Chair of the IFRS Foundation) presented an oral report of the highlights of comments received on the Trustees’ Strategy Review Report. He noted that, while the comment period does not close until 25 July 2011, comment letters received to date and the results of six roundtables have indicated broad support for the Trustees’ proposals. In particular, there was strong support for developing a mission statement; for the focus on full adoption/ incorporation of IFRSs as issued by the IASB into national financial reporting systems; and for the three-tier governance structure. There was also strong support for the enhanced and intensified role of the Trustees’ Due Process Oversight Committee. Finally, there was widespread agreement on the direction of the funding model proposed.

Michel Barnier, EU Commissioner for the Internal Market, welcomed both reports – but commented especially on the Trustees’ Strategy Review Report. He noted that the European Parliament and Member States wanted a proper upgrading of the governance structure of the IFRS Foundation and the IASB. An enhanced due process that included effects analysis/ impact assessments was necessary. He stressed that Europe remained ‘committed to IFRS’.

In response to a question from Yves-Thibault de Silguy (IFRSF), Mr Kono said that the working group was not likely to suggest that membership of the Monitoring Board should be linked directly to the adoption of IFRSs by a given date, However, it was expected that Monitoring Board members demonstrate a level of commitment to such adoption.

David Sidwell, Chairman of the Due Process Oversight Committee (DPOC), noted that the Committee was trying to do more rigorous and timely oversight, while maintaining a balance between oversight and impinging on the technical debate. The Committee has met monthly since April and publishes a précis of its discussions shortly after each meeting.

He noted that the Committee had been involved in and understood the reasons for the announcement on 14 April by the chairs of the IASB and FASB on the timing of delivery of the four major standard-setting projects. He also noted that the Committee had reviewed and cleared the due process that supported the recently-issued IFRSs (IFRSs 10-13, etc). A feedback statement, including an effects analysis on joint arrangements should be released on 14 July.

Looking forward, the DPOC has reviewed the planning for the post-implementation review of IFRS 8 Operating Segments. This will be a test case for post-implementation reviews and the DPOC will seek to learn from it as it prepares subsequent post-implementation reviews.

Mr Sidwell noted that the Advisory Council and the Interpretations Committee are also in the DPOC’s sights as the Committee seeks to review the Council and the Interpretations Committee. He stated that the Advisory Council would be consulted explicitly on the forthcoming agenda consultation. The Council had already been pro-active in providing input to the IASB and the DPOC and the Council wanted this engagement to continue.

Hans Hoogervorst, IASB Chairman, made some comments on the major projects and on financial instruments in particular. He noted that the existing IAS 39/ FASB incurred loss model was not forward-looking enough and that IAS 39 Financial Instruments: Recognition and Measurement was ‘too restrictive’. That said, even under IAS 39, impairment triggers [on sovereign debt] have been met, but the application of the Standard had been inconsistent. He explained that under IAS 39, most sovereign debt is classified as available for sale and that IAS 39 produces a ‘cliff effect’ when an impairment occurs. Under IFRS 9 Financial Instruments, sovereign debt could be measured at amortised cost. IFRS 9 has rigorous impairment rules that were just as rigorous as those in IAS 39, but IFRS 9 avoids the cliff effect in IAS 39.

Aki Fujinuma (IFRSF Interim Co-Chair) outlined that the IFRS Foundation was expecting to have a balanced budget in 2011 and noted new funding from Nigeria, Brazil and Korea. However, the ultimate independent funding regime was not yet in place.

M. Barnier expressed frustration that the Monitoring Board always had to come back to this issue, noting that the European Commission and the IFRS Foundation had signed a grant agreement for €4,250K for 2011, with similar amounts in 2012 and 2013. With additional voluntary contributions from other EU Member States, Europe’s contributions exceed what was expected. He suggested that there be a link between Monitoring Board membership and financial support for the Foundation.

The public session of the Monitoring Board concluded.