Notes from IASCF Trustees meeting 23 March

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25 Mar 2006

The Trustees of the IASC Foundation, under which the IASB operates, met in public session on 23 March 2006. Presented below are the preliminary and unofficial notes taken by Deloitte observers at the meeting.NOTES FROM THE IASCF MEETING23 MARCH 2006 LONDON General Because this was the first meeting for new Trustees, the agenda included several overviews of current activities and procedures.

The new Trustees seemed concerned about reports of divergent interpretations of IFRS by various national bodies. It was agreed that this will be discussed in greater detail during the next meeting.

IASC Foundation Trustees' Meetings

The IASCF Chairman (Tommaso Padoa-Schioppa) indicated that some of the trustees would prefer to have four (vs. current three) meetings a year. The fourth 2006 meeting will be potentially held in January 2007, provisionally in Tokyo, Japan.

IASB's Due Process Handbook

The revisions to the Handbook were discussed in November 2005. They were not discussed again during this meeting. The marked-up document, which included those revisions, was circulated to the attendees (including observers) of the meeting. Trustees approved the revised Handbook. It will be available on the IASB's website shortly.

IFRIC's Draft Due Process Handbook

The Draft Handbook builds on the Preface to IFRIC Interpretations and on the experience of the IASB's Handbook. Trustees approved the Draft Handbook. It will be released for the public comment shortly. The comment period will be 120 days.

IFRIC Update

The IFRIC Chairman, Bob Garnett, provided an overview of IFRIC's activities. Trustees raised the following issues:

  • Whether the Trustees should be more involved in the recruitment of the IFRIC members.
  • Whether Trustees needed to examine the IFRIC's work programme.
  • Number and priority of requests received and taken on the agenda.

In response it was noted that IFRIC will never be able to address all the requests, for various reasons, primarily because it does not want IFRS to become rules-based. The IFRIC Chairman promised to present IFRIC's requests history (requests received, addressed, etc.) during the next Trustees' meeting.

There seemed to be a desire among Trustees to devote more attention to IFRIC's activities, especially in the light of the following discussion about the divergent interpretations by national bodies.

The role of national/regional regulators and standard-setters

Trustees raised a concern whether the national standard-setters and national enforcement bodies may work against the objective of consistency in IFRS application by issuing divergent interpretations. The discussion evolved in the following main three directions:

1. Whether IFRIC should provide more interpretations. This was also discussed earlier (see above). A comment was made that IFRIC did not provide interpretations, the SEC would. Major accounting firms sometimes help to provide interpretations. No decisions were made at this stage.

2. Communication with national standard-setters. It was noted that national standard-setters cannot be prevented from issuing their interpretations of IFRS. However, the IASB has met with the national standard-setters and developed a Statement of Best Practice, which encourages the national standard-setters to identify issues and address them with IFRIC.

3. Principles-based vs. rules-based standards. It was acknowledged that it was difficult to strike the right balance. Trustees acknowledged that principles-based global accounting standards are appropriate. However, at the same time there is a danger of losing a single set of global standards if there is inconsistent application. Trustees expressed concern that differing national or regional interpretations could lead to national variants of IFRSs.

The Chairman said that it was an important strategic issue and it should be discussed in a more structured manner during the next meeting.

Overview of activities of the Standards Advisory Council (SAC)

The SAC Chairman, Nelson Carvalho, provided the overview. He stressed that a special effort had been made to include all (that is, not just native English speakers) in the SAC's discussions. Also, the SAC Chairman has increased his attendance of the IASB's and other meetings to ensure that the issues raised by SAC were addressed.

He also identified four challenges for IFRS as a set of global standards: interpretation, education, enforcement, and translation.

One of the Trustees asked whether SAC was happy with the IASB's agenda in respect of convergence. The SAC Chairman responded by noting that convergence agenda had primarily been set up in consultation with SAC before he assumed the SAC chairmanship. Overall he believed that SAC members are happy with the agenda. SAC will try to be more active in the future agenda discussions.

One of the IASB members wanted to clarify whether the SAC Chairman saw the SAC's main objective as (a) helping the Board with the strategic direction or (b) participating in technical discussions. The SAC Chairman said that SAC's involvement in the technical issues is unavoidable.

IASB's Work Programme on Convergence

The IASB's Chairman, Sir David Tweedie, made a presentation outlining three groups of projects: short-, mid- and long-term. The first two aim to eliminate reconciliations between IFRS and US GAAP for SEC private registrants.


  • IAS 23 - eliminate the expense option for borrowing costs
  • IAS 31 - eliminate the proportionate consolidation option for joint ventures
  • IAS 14 - converge with US GAAP (FAS 131) for segment reporting. ED 8 has been issued.
Mid-term, that is, by 2008, including implementation in 2008:
  • Business Combinations - David Tweedie admitted that there was no support for the existing Exposure Draft. The IASB will deliberate again.
  • Consolidations, including SPEs. The US tends to look at majority ownership while IFRSs use a control approach.
  • Fair Value - IASB will propose measurement guidance based on the forthcoming FASB standard.
  • Liability and equity - the FASB is leading the project.
  • Performance Reporting - The ED for Segment A was issued last week, addressing the format of the income statement. Segment B will address more fundamental issues.
  • Pensions cause many concerns world-wide. This project is not on the agenda at the moment, but the IASB would like to address it.
  • Revenue Recognition - the project will result in a Discussion Paper.
Long-term, that is, five year period:
  • Derecognition generally
  • Replacement of IAS 39
  • Intangible assets (project led by Australia)
  • Leases - liabilities should be on balance sheet

The IASB continues its work on the following projects, which are outside of the convergence roadmap:

  • Insurance
  • Standards for SMEs: the main objective is to simplify IFRSs. The IASB's main challenge is to find the right balance between simplification and being faithful to IFRSs.
  • Conceptual Framework: One of the Trustees asked why the Conceptual Framework was not in the convergence roadmap, given its importance for the new guidance. The response was that it did not fit in with the 2008 timing target, as it will take three to four years to finish, and will be released chapter by chapter.

Several Trustees expressed concern that more changes are on the horizon. Many companies just finished coping with first-time adoption. David Tweedie indicated that 2006 and 2007 were going to be quiet in terms of new guidance.

IASB Chairman David Tweedie said that more and more countries are adopting IFRS in one form or another. An example is China. Other countries are considering adoption, for example Canada, Japan, India, and certain countries in Latin America.

One of the Trustees pointed out that it is not just the speed but also the quality of the adoption that matters.

This summary is based on notes taken by observers at the IASCF meeting and should not be regarded as an official or final summary.

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