Report to ECOFIN on IASB governance and funding

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14 Jul 2007

The staff of the European Commission has released its second report on governance and funding developments in the IASB and the International Accounting Standards Committee Foundation.

Click to (PDF 122k). Presented below are the report's conclusions.

The Commission welcomes recent announcements of the IASCF/IASB and the steps taken in order to address governance concerns. In particular, the Commission welcomes measures taken to establish a more effective interface between the Trustees and the IASB, and to put in place a framework to provide impact assessment studies for new standards, the commitment to provide appropriate feedback to comment letters, abolition of the IFRIC agenda Committee, reinforcement of administrative capacities of IFRIC and ongoing analysis of efficiency of SAC.

However, it remains to be seen how the IASCF/IASB will apply these changes in practice, in particular on impact assessment, feedback to comment letters and on SAC, so as to guarantee proper due process and accountability towards stakeholders. It is also very important that the comments from the Roundtable on consistent application of IFRS are taken into account in work of the IASB on standards and interpretations.

The Commission also considers that in addition to ex-ante impact assessments, it is equally important that the IASB makes a proper ex post analysis of already adopted standards and interpretations to determine whether their functioning in practice is appropriate and whether they provide relevant information to users.

As regards the legitimacy of the endorsement process for IFRSs and IFRICs in the EU, it is important that Member States and the European Parliament are informed about intention of the IASB to adopt new standards at early stages. The Commission therefore invites members of the Board to appear regularly (2 or 3 times a year) before Member States and the European Parliament to present standards, which are on its work programme.

As concerns implementation of new funding scheme, the Commission is encouraged that the collection of funding from private sources is proceeding well. Nonetheless, the Commission urges those Member States which have not acted yet to do so rapidly and underlines the importance of proper diversification of sources and full participation of all interested jurisdictions.

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