Report of the IASC Foundation Chairman

Gerrit Zalm gave a brief overview of his activities since the last Trustees' meeting in January 2008. Together with Phil Laskawy, Vice-Chair, he noted that there had been a productive series of meetings in the United States.

Constitution Review

The IASC Foundation staff introduced a staff draft of Proposals and Issues for Constitution Review, which outlined the two parts of the proposed review of the IASCF Constitution: Part A Specific Proposals for Constitutional Changes and Part B, which is intended to provide a broader opportunity to comment other aspects of the IASCF Constitution. The discussion centred on Part A.

There are two principal changes proposed by the Trustees in Part A:

• the introduction of a Monitoring Group and
• increasing the size of the IASB to sixteen members.

IASCF staff noted that the Monitoring Group was being proposed as a way of putting in place 'structured contacts' with public authorities with a legitimate interest in accounting standard setting. The IASCF Chairman stated that the Monitoring Group was being proposed as a way of providing 'democratic legitimacy' to the organisation while preserving the IASB's independence.

Almost all Trustees participated in the discussion. Almost all were critical of issuing Part A and Part B together. One Trustee warned the staff not to underestimate the stress that Part A would unleash, nor to underestimate the careful communication that would be necessary to explain why the Trustees had decided on the proposals over other alternatives possibly available to it. There was a high degree of scepticism and distrust in the market: about key players and stakeholders and the IASCF/IASB. Consequently, it would be important to prepare the ground carefully. After some debate, it was decided to issue Part A alone and to proceed with other constitutional issues once the comment period had concluded.

Several Trustees were concerned, and had heard similar concerns voiced in constituent meetings, about the influence of the proposed Monitoring Group on the independence of the IASCF and the IASB, especially independence from special pleadings and political interference. The mandate and/ or Terms of Reference of the Monitoring Group would be crucial. In addition, there were concerns that the Group would add another layer of oversight that would confuse rather than enhance the oversight of the IASCF. In addition, if the Group was seen as too powerful, the role and calibre of the Trustees could be compromised.

After discussion, the general mandate of the Monitoring Group was agreed to similar to:

The Monitoring Group shall be responsible for the approval of all Trustees to fill vacancies caused by routine retirement or other reason. In approving such selection, the Monitoring Group shall be bound by the criteria set out in [Constitution] Sections 6 and 7. The Trustees shall develop a nominations process in conjunction with the Monitoring Group and shall manage that process. The Trustees shall consult with international organisations as set out in Section 7.

A staff proposal that the Monitoring Group be able to recommend candidates was rejected; their role should be limited to approval alone.

The proposed composition was also examined. It is likely that the proposed Monitoring Group would be composed of:

• four members of the International Organization of Securities Commissions (IOSCO), represented by the Chairman of the Japan Financial Services Agency, the Chairman of the US Securities and Exchange Commission, the chair of the IOSCO Emerging Markets Committee, and the chair of the IOSCO Technical Committee*,
• the responsible member of the European Commission [currently the Commissioner for Internal Market]
• the managing director of the International Monetary Fund, and
• the president of the World Bank

The Monitoring Group would require a super-majority of five to approve appointments of Trustees. Some Trustees were concerned that a bloc of 'IOSCO + the EU' would be created, potentially over-ruling constituencies represented by the IMF and World Bank. Another Trustee noted with a degree of concern that six of the proposed seven seats represented interests of the OECD countries and that 150 other jurisdictions were represented by the IMF. The absence of other 'interested' market regulators (such as the Basel Committee or the International Association of Insurance Supervisors) was also noted.

There was no substantive discussion of the proposed changes to the composition of the IASB. However, it was noted that the suggested introduction to the Invitation to Comment would address why the Trustees thought that an increase in the size of the Board was necessary and desirable.

The IASCF staff noted the several criticisms and suggestions made by Trustees. The staff will circulate a revised draft to the Trustees out of session, prior to issuing the Invitation to Comment later in April 2008. The comment period will be 90 days.

Report of the Due Process Oversight Committee

The Trustees received a report from the chairman of the Trustees' Due Process Oversight Committee. The committee will include a summary report in the IASC Foundation's annual report and include a more comprehensive report on its activities on the Foundation's Website.

The focus of the committee in 2008 would be, in particular, the standard-setting process at the IASB; and the effectiveness of working groups.

Report from the IASB Chairman

The IASB Chairman presented a report of the IASB's activities and the status of its projects. He highlighted that the IASB was being encouraged to accelerate its work on consolidation, fair value measurement guidance and derecognition in light of the sub-prime crisis. The Board was adapting the way it worked to make it more responsive and better able to make steady progress on agenda issues, including better use of Board advisors to assist the staff in developing detailed proposals.

At the IASB Chairman's invitation, the IFRIC Chairman presented a brief report, noting that the IFRIC had cleared its backlog of issues and was now working on a manageable number of issues. He suggested that the relatively low number of requests for interpretations being handled by the IFRIC suggested that constituents were becoming familiar with the principles in IFRS.

Report from the SAC Chairman

The SAC Chairman gave a brief report of the February SAC meeting, noting in particular that the Council had expressed strong reservations about the apparent heavy weighting of securities regulators on the proposed Monitoring Group.

Review of Long-term Funding of the IASC Foundation

The IASC Foundation gave a very brief report on the current state of the ongoing efforts to secure a stable long-term funding base for the Foundation. The weakness of the US dollar and current market turmoil were not helping the organisation to resolve this issue. Currently, the IASCF had secured only just over £13 million of the £16 million it is seeking.

There were positive developments in Canada, where the Canadian Securities Administrators were hopeful that a broad, market-based funding system could be implemented; the accounting profession was also interested in contributing. In Europe, the focus of the IASCF is turning to smaller Member States now that the major EU economies have funding strategies in place, or nearly so.

The staff noted that contributions from South-East Asia were conspicuous by their absence; however discussions were ongoing in Singapore and other jurisdictions in the region would be addressed later.

XBRL

The Trustees received an update on developments with respect to the XBRL IFRS Taxonomy. The XBRL staff noted a first draft of the IFRS Taxonomy 2008 had been submitted to the XBRL Quality Review Team in February as planned and, so far, no significant quality issues had been identified. The Taxonomy will be exposed for public comment by the end of March 2008 for a 60-day comment period.

The meeting continued in non-public session.

This summary is based on notes taken by observers at the IASCF meeting and should not be regarded as an official or final summary.