• Constitution Review Part 1. The Trustees decided to publish for public comment proposals on the first part of their review of the IASC Foundation's Constitution. The proposals would:
  • Monitoring group. Establish a link between the organisation and a Monitoring Group comprising representatives of public authorities and international organisations that have requirements for accountability to public authorities
  • IASB size and composition. Expand the IASB from 14 to 16 members and adopt new guidelines regarding the geographical diversity of the members of the IASB.
  The proposals will be released shortly and have a 20 September 2008 comment deadline. The Trustees expect to reach final decisions on this part of the Constitution Review at their meeting in Beijing on 9-10 October 2008. The changes would take effect from 1 January 2009.
• Credit crunch. The Trustees supported the IASB's efforts to respond expeditiously to the report of the Financial Stability Forum relating to the current Credit Crunch.
• Advisory Council. The membership structure of the Standards Advisory Council will be changed so that members would serve primarily as representatives of organisations. To accomplish this, the terms of all SAC will expire at the end of 2008. The Trustees will invite interested organisations to put forward candidates for membership. They will also seek qualified candidates to serve as chairman of the SAC (the current chairman's three-year term ends at the end of this year).
• Review of working groups. The Trustees' Due Process Oversight Committee and the IASB have agreed to launch a review of the effectiveness of existing IASB working groups. The review will survey working group members.
• Trustee appointments. Nine Trustees have terms expiring on 31 December 2008. Six will be reappointed for a second term – Marvin Cheung, Sam DiPiazza, Robert Glauber, Liu Zhongli, Sir Bryan Nicholson, and Mohandas Pai. Max Dietrich Kley, David Shedlarz, and Junichi Ujiie are not seeking a second term or have served a second term already. Therefore, the Trustees will advertise for one Trustee each from Asia-Oceania, Europe and North America.

Types of changes to the IFAC Code of Ethics Proposed in the Exposure Draft:

• Revised wording to indicate clearly what are the requirements
• Guidance on when a temporary departure from a requirement in the Code is allowed, and how to do it
• Description of five categories of threats to compliance with the fundamental principles, and examples of situations in which those threats might be created
• Guidance on how to assess whether a threat to compliance with the fundamental principles is 'clearly insignificant', which is defined in the Code as 'a matter that is deemed to be both trivial and inconsequential'
• Clarification of the 'conceptual framework approach' to emphasise the need for a professional accountant to apply the framework in the Code to any situation that is not explicitly addressed in the Code
• Clarify that examples in the Code must be followed.
• Drafting changes consistent with the following principles:
  • 'Consider' is used where the accountant is required to think about several matters
  • 'Evaluate' is used when the accountant has to assess and weigh the significance of a matter
  • 'Determine' is used when the accountant has to conclude and make a decision

The creation of a new body with authority over Trustee appointments and reappointments is a crucial step for the IASC Foundation. This body is likely to be granted more authority in the future over other key governance functions, including the Foundation's funding.

In this respect, the proposed Monitoring Group contains significant flaws, the primary one being its inability to credibly represent at global level the investors and other capital market users which should be considered the Foundation's key stakeholders.

Moreover, the very short timetable proposed for the first part of the Foundation's Constitution Review is not warranted by the circumstances. The Foundation's Trustees should take a step back and consider a revised concept of oversight body as part of a one-phase Constitution Review to be completed in 2009.

The IAASB's 2009-2011 strategy focuses on three areas:

• The development of standards;
• The facilitation and monitoring of adoption of those standards; and
• Responding to concerns about the implementation of the standards by activities designed to improve the consistency with which they are applied in practice.

The four final ISAs are:

• ISA 250 (Redrafted) Consideration of Laws and Regulations in an Audit of Financial Statements
• ISA 510 (Redrafted) Initial Audit Engagements–Opening Balances
• ISA 550 (Revised and Redrafted) Related Parties.
• The revision of this ISA clarifies the meaning of 'related party' and explains the auditor's responsibility to obtain sufficient evidence about the required accounting and disclosure of related party relationships and transactions and to understand how such relationships and transactions affect the view given by the financial statements.
• ISA 570 (Redrafted) Going Concern