Commentary on the proposed IASCF Monitoring Group

  • Constitution review (old) Image

15 Jul 2008

The European 'think tank' Breugel has published a policy note Empower Users of Financial Information as the IASC Foundation's Stakeholders.

This commentary, by Mr Nicolas Veron, a research fellow at Bruegel, analyses the draft proposal for reforms to the IASB's governance that was the subject of Roundtable Discussions conducted by the Trustees of the IASC Foundation on 19 June 2008. The proposal would, among other things, create a Monitoring Group to oversee the activities of the IASC Foundation. Mr Veron argues that investors and other users of financial statements should be directly represented on the new group:

The creation of a new body with authority over Trustee appointments and reappointments is a crucial step for the IASC Foundation. This body is likely to be granted more authority in the future over other key governance functions, including the Foundation's funding.

In this respect, the proposed Monitoring Group contains significant flaws, the primary one being its inability to credibly represent at global level the investors and other capital market users which should be considered the Foundation's key stakeholders.

Moreover, the very short timetable proposed for the first part of the Foundation's Constitution Review is not warranted by the circumstances. The Foundation's Trustees should take a step back and consider a revised concept of oversight body as part of a one-phase Constitution Review to be completed in 2009.
Mr Veron concludes that "This governance reform will have a significant impact on the future shape of IFRS standards and should not be rushed without due public debate. As primary users of accounting information, investors and capital-markets participants should be granted direct representation in the future governance framework." Policy note posted on IAS Plus with the kind permission of Breugel.
Click to view Empower Users of Financial Information as the IASC Foundation's Stakeholders (PDF 172k).

 

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