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Monitoring Board summary of comments on IFRS Foundation governance review

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21 Sep 2011

The Monitoring Board has released a document summarising responses to its Consultative Report on the Review of the IFRS Foundation's Governance, published on 7 February 2011.

The report provides a summary of responses from the 80 comment letters received, which expressed a wide variety of views. In high-level terms, respondents replied as follows (noting the contrary view was also often expressed by a significant proportion of respondents):

Consultative Report on the Review of the IFRS Foundation's Governance
Summary of respondent's views

IASB

  • Many respondents agree (or partially agree) with the proposal to urge concrete efforts to deepen the pool of candidates for IASB membership
  • Many respondents agree that the roles of the IASB Chair and CEO of the IFRS Foundation should be separate
  • Many respondents agree that a clearer division of responsibility between staff dedicated to the IASB operations and staff dedicated to the Foundation's administrative and oversight functions should be considered

Trustees

  • Some respondents believe the current constitutional requirements regarding Trustee composition are adequate, but others made many suggestions for improvement around geographical balance and professional backgrounds
  • Many respondents agree with the proposal to provide increased transparency into the process for Trustee nominations, but many think the current arrangements for involvement of the Monitoring Board in the nomination process are appropriate
  • A large majority of respondents agree that further clarification of the criteria for the Trustee's candidacy would help support confidence of stakeholders

Monitoring Board

  • A larger majority of respondents agree with limiting the Monitoring Board membership to capital markets authorities
  • Most respondents agree with expanding the Monitoring Board membership by adding a mix of permanent members (representing major emerging markets) and rotating members (from other markets)
  • A majority of commenting respondents supported the selection of rotating members through IOSCO
  • Most respondents agree the Monitoring Board should continue to make decisions by consensus
  • While most respondents broadly support increased interaction between the Monitoring Board and other parties with a stake in IFRSs, views varied broadly as to how to achieve this
  • A large majority of respondents generally support increased transparency into the Monitoring Board's functions and support the measures provided in the report as a means to increase visibility
  • A large majority of respondents oppose the Monitoring Board's direct involvement in IASB agenda-setting with compulsory power - in general, those respondents say the current arrangement is absolutely appropriate and further involvement should be avoided in order not to damage the standard-setter's independence in terms of both substance and appearance
  • Most respondents did not support the expansion of the Monitoring Board involvement in the nomination of the IASB Chair
  • A large majority of respondents agree that the Monitoring Board's responsibilities should explicitly include consultation with the Trustees as they further develop the framework
  • There were many views against the establishment of a permanent secretariat for the Monitoring Board

Other areas

  • The majority of respondents believe the current arrangements for the standard-setting process adequately ensure the appropriate involvement of all relevant stakeholders and that all relevant public policy objectives are taken into account
  • There is full agreement on establishing a more stable and independent funding model, and most respondents argue that improvement in the funding model is primarily a responsibility of the Trustees
  • The majority of respondents agree with the need for regular reviews of the governance structure and in general, there should be alignment between future Monitoring Board governance reviews and the IFRS Foundation Constitution reviews

The Monitoring Board intends to coordinate closely with the IFRS Foundation Trustees who are currently undertaking a separate strategy review in order to develop a joint package of improvements, with the objective of finalising the process during the fourth quarter of 2011.

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