The IPSASB Governance Review Group consists of members from the International Monetary Fund (IMF), Organization for Economic Cooperation and Development (OECD), the World Bank, Financial Stability Board (FSB), the International Organization of Securities Commissions (IOSCO) and the International Organization of Supreme Audit Institutions (INTOSAI).

The Review Group's consultation paper responds to concerns that the existing governance arrangements of the IPSASB are not subject to a formal public interest oversight mechanism, outlining a number of possible options for strengthening the IPSASB's governance arrangements:

• Option 1 - extending the scope of the IFRS Foundation Monitoring Board and Trustees activities
• Option 2 - establishing separate monitoring and oversight bodies for the IPSASB while it remains under the auspices of the IFAC
• Option 3 - re-establishing the IPSASB outside of IFAC with its own monitoring and oversight bodies.

The IPSASB's response to the consultation paper, in unanimously supporting Option 2, sets out the IPSASB's view that "this alternative meets all of the characteristics for strong public interest oversight... accountability, independence, competence and credibility" and that it is "a practical and timely solution".

In addressing concerns outlined in the consultation paper that retaining IPSASB under the auspices of IFAC results in perceived conflicts of interest, the IPSASB response notes the following:

The factual experience of the IPSASB has been that there has never been any interference by IFAC with respect to the IPSASB’s independence or any interactions that have been negative in any way. We have found that in many respects IFAC’s involvement is in fact a strength - because the participation of the accountancy profession adds an element of independence from the principal users of our standards, governments and international organizations. This is unlike other IFAC standard-setting boards which are setting standards for IFAC member body members themselves.

In addressing the structure and mandate of an oversight body under its preferred option, the IPSASB notes its view that the monitoring and oversight function could be merged and carried out by a single body. In the IPSASB's view, membership of the body would not require technical expertise, but members "should be enthusiastic about the need for public interest oversight... and have strong support for fiscal transparency". IPSASB's proposed role for the oversight body would include an ability to approve or comment on the IPSASB's strategic and work programmes. In addition, the IPSASB supports the creation of a Consultative Advisory Group (CAG), whose roles would include providing advice on the IPSASB's agenda and project timetable (including priorities) and the provision of technical advice on projects.

The IPSASB's response outlines a number of reasons as to why the IPSASB does not believe that extending the scope of the IFRS Foundation Monitoring Board and Trustees activities to encompass public sector accounting standard setting is appropriate, including:

• Considerable questions as to whether the IFRS Foundation would be willing to take on IPSASB oversight and commit appropriate resources
• A lack of clarity about how the oversight of the IPSASB would be integrated into the IFRS Foundation's oversight framework, and the impacts on the structures and processes of the IPSASB and International Accounting Standards Board (IASB)
• Some criticism that International Public Sector Accounting Standards (IPSASs) are already "too close" to International Financial Reporting Standards (IFRS). The IPSASB comment that the Eurostat report on the suitability of IPSASs for EU Member States highlight this criticism of the IPSASB and that bringing IPSASB under the oversight of the IFRS Trustees would "reinforce that criticism".

In terms of the third option of re-establishing the IPSASB outside of IFAC, the IPSASB believes there is insufficient detail in the consultation paper to enable debate about whether this is a realistic option and that it "raises significantly more issues".

Click for the full IPSASB consultation response (link to IFAC website).