Deloitte response to IASCF Constitution Review Part 2

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02 Apr 2009

Deloitte Touche Tohmatsu has submitted a letter of comment in response to the invitation to comment from the IASC Foundation on the Review of the IASCF Constitution: Identifying Issues for Part 2 of the Review.

Among the ideas expressed in the letter:

Deloitte Touche Tohmatsu Suggestions for IASCF Constitution Review Part 2
  • 'Principles-based' standards. The Constitution should require that "the IASB should develop financial reporting standards that are based on 'clear principles'. We would use the phrase 'clear principles' in the Constitution in preference to 'principles-based', for which there is no consensus on what that phrase means".
  • IASB due process. The IASB should amend its Due Process Handbook to require the IASB to:
    • give constituents an opportunity to comment on the IASB's agenda and relative priorities
    • substantively redeliberate a preliminary view included in a discussion paper if there is a substantial un-orchestrated level of opposition to it
    • make a preliminary assessment of the practical and cost/benefit consequences of a particular approach before committing itself to that approach
    • conduct field tests when a proposal would change current practice in an untested way
  • Fast track changes to standards. We do not support creating a separate 'fast track' procedure for changes to IFRSs
  • Standards for not-for-profit entities and public sector entities. The IASB's primary function at present is 'private sector' financial reporting standards. We believe that this responsibility remains appropriate and should not change at this time. The IPSASB should be encouraged to continue to develop public sector standards based on IFRSs. In due course, although not as a current priority, the IASB should address issues in financial reporting by not-for-profit entities.
  • Collaboration. The Constitution should not be amended to encourage or require IASB collaboration with any specific organisations. The Constitution already permits such collaboration, and the IASB has been doing so quite successfully with a range of organisations.
  • Monitoring Board. The Constitution should be amended to incorporate several of the principles set out in the Memorandum of Understanding between the IASCF and the new Monitoring Board – specifically that the MoU does not alter the terms of the relationship between the Trustees and the IASB; nor does it alter the Trustees' responsibilities as described in the Constitution.
  • Standards Advisory Council. The Trustees develop criteria that will allow them to assess how effectively the IASB engages with and responds to the Standards Advisory Council.
  • Funding. We are firmly in favour of a principle that those parties who use the IASC Foundation 'works' (IFRSs and related documents) should bear the burden of funding the IASC Foundation's standard-setting activities. We believe that this is best left in the hands of local financial market regulators, who in turn should be responsible for raising the money from their constituents, including but not necessarily limited to preparer companies.
  • IASCF openness. 'Many of the criticisms being levelled at the IASCF and the Trustees in particular stem from a lack of transparency and understanding around what they do and how they do it. We encourage the Trustees to prepare a document that explains their operating procedures and how they exercise their oversight functions.'
  • IASCF CEO. We favour appointing a CEO of the IASCF, one who is not a member of the IASB or the IASB/IFRIC staff
Click here for more information about 2008-2009 Constitution Review on IAS Plus.

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