Trustees to consider final constitution amendments

  • Constitution review (old) Image

18 Jun 2005

At their meeting in Paris on 21 June 2005, the Trustees of the IASC Foundation, under which the IASB operates, will discuss a draft of the proposed final report of the Constitution Review.

Below are some of the key proposed conclusions. Click here for more information about the Constitution Review.

Proposed Final Conclusions of IASC Foundation Constitution Review

  • Incremental rather than fundamental changes. "Having assessed the organisation's progress against the objectives laid out in the constitution, the trustees have concluded that the basic structure, set out by the 2000 constitution, is sound and therefore have not contemplated fundamental change."
  • Addition to IASCF objectives for SMEs and emerging economies. In fulfilling the objectives of developing and promoting high quality, understandable, and enforceable global accounting standards, take account of the special needs of small and medium-sized entities and emerging economies.
  • Number of trustees. Expand board of trustees from 19 to 22 members.
  • Geographical balance of trustees.
    • Six from North America (unchanged).
    • Six from Europe (unchanged).
    • Six (was four) from the Asia/Oceania region
    • Four (was three) from any area, subject to establishing overall geographical balance.
  • Backgrounds of trustees. The constitution will require an appropriate balance of professional backgrounds, including auditors, preparers, users, academics, and other officials serving the public interest. Two will normally be senior partners of prominent international accounting firms. This is essentially unchanged.
  • Selection of trustees. Trustees will adopt procedures for appointing trustees. Those procedures must include consultation with national and international organisations of auditors (including IFAC), preparers, users, and academics and public solicitation of nominees including self-nominations. To achieve this objective, the trustees plan to establish a high level advisory group of five to seven leaders of official international and regional organisations. The trustees will consult that body before making decisions on trustee appointments. Currently, five trustees are nominated by IFAC and three others are nominated after consultation with certain specified organisations.
  • Term of chairman. The trustees appoint one of their own number as chairman. While trustees will normally serve a maximum of two three-year terms, the chairman may serve for a maximum of two three-year terms as chairman regardless of prior service as a trustee. Currently all trustees including the chairman serve a maximum of two three-year terms.
  • Liaison IASB Board Members. Requirement for designating seven IASB members as liaisons with major national standard setters has been removed from the constitution.
  • Trustee consideration of IASB agenda. The trustees' annual review of the strategy of the IASC Foundation and the IASB and its effectiveness is expanded to include "consideration, but not determination, of the IASB's agenda".
  • IASB responsibility for its agenda.
    • New: IASB has full discretion in developing and pursuing the technical agenda.
    • Was: IASB has full discretion over the technical agenda.
  • Trustee oversight of IASB, IFRIC, SAC. In addition to establishing and amending operating procedures for the IASB, IFRIC, and SAC, the trustees will also establish, amend, and review compliance with "consultative arrangements and due process".
  • Education. New trustee responsibility would be to foster and review the development of educational programmes and materials.
  • Number of part-time IASB members. Kept at two.
  • Main qualification for IASB members. Changed from "technical expertise" to "professional competence and practical experience".
  • Geographical mix of IASB members. "Trustees shall ensure that the IASB is not dominated by any particular constituency or geographical interest" (trustees rejected specifying a geographical mix).
  • Background mix of IASB members.
    • New: "Appropriate mix of recent practical experience among auditors, preparers, users and academics".
    • Was: Minimums of five practising auditors, three preparers of financial statements, three users of financial statements, and one academic.
  • IASB voting. A vote of 9 of the 14 IASB members is required to approve an exposure draft, final Standard, and Interpretation (was 8 of 14).
  • Due process steps. IASB is required to explain its reasons if it decides not to follow any of the non-mandatory due process steps. Such non-mandatory steps are:
    • Publishing a discussion document before an exposure draft.
    • Forming working groups.
    • Publishing a basis for conclusions.
    • Holding public hearings.
    • Conducting field tests.
  • Steering committees. Now referred to as 'working groups' consistent with recent IASB practice.
  • Chairman of Standards Advisory Council. Appointed by trustees. Will not be a member of the IASB or its staff. Currently the IASB chairman is also the SAC chairman.

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