We comment on IASCF Constitution proposals
26 Nov 2009
On 9 September 2009, the Trustees of the IASC Foundation (IASCF) published for public comment proposals arising from the second part of their two-part review of the IASCF Constitution.
- Change of name of the IASC Foundation to the IFRS Foundation and the IASB to the IFRS Board
- Replace all references to 'accounting standards' with 'financial reporting standards' throughout the constitution
- Clarify the objectives of the organisation, in particular:
- Clarify the need to take account of emerging economies and, as appropriate, the special needs of small and medium-sized entities, and
- Not to broaden the scope to cover standards for public and not-for-profit entities
- Clearly acknowledge the role the Monitoring Board now plays in the governance structure of the organisation
- Formally recognise Africa and South America in the composition of the Trustees by requiring one Trustee from each of those two regions
- Establish a procedure for an accelerated due process in exceptional circumstances
- Provide for appointing up to two vice-chairmen for both the Trustees and the IFRS Board
- Amend the length of a possible second term of the IFRS Board members to ensure appropriate turnover, as follows:
- Board members would be appointed initially for a term of five years, with the option for renewal for a further three-year term. This will not apply to the Chairman and Vice-Chairman, who may be appointed for a second five-year term.
- The Chairman or Vice-Chairman may not serve for longer than ten consecutive years.
- Expressly provide that the IASB must consult the Trustees and the SAC when developing its technical agenda
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Some key points that we made in our letter |
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We think that the Trustees' proposals with respect to consultation on the IASB's technical agenda and priorities do not go far enough. In our view, the Constitution should require the IASB to consult formally with constituents on a regular basis about the topics on its technical agenda and the relative priorities that have been assigned to those topics. The comment period must give constituents a realistic opportunity to comment on these matters. We also recommend that the positions of IASB Chair and Chief Executive Officer of the IASC Foundation be separated. The IASCF and the IASB are under increasing public scrutiny from many jurisdictions and it is vitally important that there be no conflict of interest (real or perceived) between the roles of IASB Chairman and the chief executive of its oversight body. We do not support the proposal to allow the Trustees, in exceptional circumstances, to authorise a shorter due process period. In order to maintain its credibility as an international standard-setter, the International Accounting Standards Board must expose all proposals for a period of time that affords all constituents a reasonable opportunity to understand, digest and comment on the IASB's proposals. As explained in Appendix A, our view is that permitting anything less than 30 days cannot be said to be proper 'due process'. Finally, we have concerns about the operations and output of the International Financial Reporting Interpretations Committee. We do not wish to see the IFRIC become an urgent issues group, but we think that there are issues that could be addressed efficiently by the IFRIC, but which – because of the Constitution's mandate for the IFRIC and the operating procedures documented in the IFRIC's Due Process Handbook – are referred to the IASB for action. In Appendix B we offer some suggestions about how the IFRIC's role and mandate could be reformed to make better use of the Committee. |
You can find background information on the 2008-2009 IASC Constitution Review Here.