Gerrit Zalm, IASCF Chairman, chaired this meeting, noting that this would not be the usual situation because the Monitoring Board would appoint its own chair. He welcomed the Monitoring Board members:

• International Organization of Securities Commission (IOSCO):
  • Emerging Markets Committee: Guillermo Larain
  • Technical Committee: Hans Hoogervorst
• European Commission: Charlie McCreevy, Commissioner for Internal Market and Services
• Financial Services Agency (Japan): Junichi Maruyama, Deputy Commissioner for International Affairs
• US Securities and Exchange Commission: Mary Schapiro, Chairman
• Basel Committee on Banking Supervision [Observer]: Sylvie Matherat (Banque de France), Chair, Accounting Task Force

Mr McCreevy noted that the financial crisis had highlighted the necessity of removing 'regulatory arbitrage' through co-operation among securities regulators. Ms Schapiro stated that the SEC remained committed to the independence of financial reporting standard-setting and to the investor focus of financial reporting. In addition, as far as the capital markets were concerned, she supported the pre-eminence of investors' needs. A single set of high-quality financial reporting standards was part of that commitment, and the SEC remained committed to the goal of international convergence.

The IASCF Vice-Chairman pleaded with the Monitoring Board that they continue the apolitical nature of the Trustees: in his view, the dedication and impartiality of the Trustees had served the organisation well for the past eight years and was something worthy of preserving.

Trustees' Oversight Activities in 2008 and Priorities for 2009

Antonio Vegezzi, Chair of the Trustees' Due Process Oversight Committee, presented a review of the activities of the committee for 2008 and their priorities for 2009. He noted that the due process of the IASB was an area of concern for all the Trustees, and that the meetings of the committee were not restricted to members of the committee. The meetings and minutes are not made public, but reports of the activities of the committee are discussed with the Trustees in open session.

Members of the Monitoring Board questioned the suspension of due process in October 2008. Mr Vegezzi stated that the decision was taken by the Trustees as a whole, unanimously and after intense discussion. It was not something that was done lightly.

Sam DiPiazza noted that the Trustees took the due process of the organisation very seriously and that the due process of the IASB was 'far beyond' that of the US Financial Accounting Foundation and the FASB. He stated that 'due process is at the heart of everything that the Trustees do'.

IASC Foundation Financial Position

David Sidwell, Chairman of the Trustees' Audit Committee, reviewed the financial statements of the IASB, which had been approved at a meeting of the Audit Committee on 31 March 2009 and the audit report signed.

Looking forward, Mr McCreevy noted that the European Union would be providing funds from the main budget for the years 2011-2013, subject to the final approval of the Commission's recommendation, which was expected by the end of the current EU Parliamentary session. There was a general discussion of funding, but little beyond general support for the approach being developed by the Trustees.

Funding and Requirements for the IASC Foundation

Miranda Corti, IASCF Director of Finance and Resources, made a presentation of the IASCF's expected resource requirements over the next five years. To meet the IASCF's objective of establishing IFRS as the global standards for financial reporting, staff resources would need to rise from 110 now to 140 by 2013, with an expense budget of about £23 million. A short discussion followed.

Proposed Trustee Nomination Process for 2009

The Monitoring Board was informed that the Trustees were likely to recommend the re-appointment of the following Trustees whose terms expire in 2009 and who are eligible for reappointment and have indicated a willingness to continue: David Sidwell, Paul Tellier, Jeff van Rooyen, and Luigi Spaventa. Two Trustees must retire (Phil Laskawy and Bertrand Collomb), and the process of advertising for their replacements would begin in April 2009. In particular, the proposed process was:

• April 2009: the Trustees should advertise for a minimum of two positions (the two members who are term-limited) and specifically invite nominations from Europe and North America. The advertisement will be released in early April in the Economist and provide six weeks for nominations.
• April and May 2009: the Trustees will provide the opportunity for the Monitoring Board to put forward candidates for consideration by the Trustees during the period of advertisement. Simultaneously, the Trustees will write to relevant stakeholder groups, particularly from the investor, preparer, and official communities, to seek nominations.
• June 2009: the Nominating Committee will develop a possible shortlist of candidates, based upon the input received from the Monitoring Board and other parties, and will conduct background research where appropriate.
• July 2009: At the Trustees' meeting, the Nominating Committee will present a recommendation to the full Trustees' meeting. Once supported by the Trustees, the Trustees would formally present nominations to the Monitoring Board for consideration. The process should be complete by September 2009.

There were no particular comments from members of the Monitoring Board on the proposed approach. However, Mr McCreevy noted that he would be consulting his European colleagues, including the EU Parliament and Member States. This comment was clearly unexpected and caused a great deal of concern, especially among Trustees. One Trustee asked whether there were other areas of the Monitoring Board's mandate that were subject to the review of the EU Parliament. Another asked whether what the Commissioner was referring to was 'consultation' or 'consent'. Mr McCreevy subsequently clarified his remarks by saying that his discussions would be informal consultations and would be restricted to EU candidates. He hoped that there would be a consensus around any candidate, but in the absence of such a consensus, the decision would rest with the Commissioner.

IFRS Adoption in Emerging Markets

Guillermo Larrain (IOSCO Emerging Markets Committee) briefed the Monitoring Board and Trustees of the results of a survey about the implementation of IFRS in emerging markets [not emerging economies]. He noted in particular that Brazil had decided to adopt (not adapt) IFRS, which was a significant move.

Sam DiPiazza observed that, in his experience, the training being undertaken in South America was impressive and that the capacity to support IFRS was already good and getting better. In addition, he had seen that principles-based judgements were 'just as robust' in emerging markets as they were in developed ones.

Response to the Financial Crisis

Sir David Tweedie introduced the IASB's responses to the financial crisis and explained in broad terms some of the issues being addressed by the IASB (most of them jointly with FASB). He stressed that this meeting should not get into technical details, but should address process issues only.

Ms Matherat (Basel Committee) stressed Basel's commitment to working with the IASB towards the 'more timely recognition of losses'. In addition, there was a need to have an audit trail from internal reporting to external financial reporting to prudential filings, but she did not elaborate what this might be.

Participants expressed various views on aspects of providing for losses in financial statements and encouraged the IASB to have an open mind as they explored the alternatives. In addition, bank regulators were encouraged to tighten the requirements about what could be distributed by banks.

A Trustee noted that it was not the loss provisioning model that had saved banks in some jurisdictions; it was the regulator actively preventing them from investing in certain asset classes that had saved them. Sir David agreed, noting that regulatory capital had been too low to cover 'unexpected' losses. Ms Matherat noted that, in her view, loan loss provisions were there to provide for expected losses; and capital provided the cushion against unexpected losses. Both had proved inadequate in the current financial crisis.

Closing the debate, Sir David outlined the IASB's proposals for replacing IAS 39, to which there was general agreement. Although welcoming the intent to replace IAS 39 'in months, not years' (Sir David's words), Mr McCreevy observed that the IASB had yet to give the Commission Services an adequate response to their letter sent in late October 2008. Sir David noted that this letter had been discussed with a broad range of constituents, and the IASB had received a strong message that the items in that letter were not imperative when compared to fixing IAS 39 as a whole. Mr McCreevy and Sir David 'agreed to differ' on this point.

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