Earlier today, the International Accounting Standards Committee Foundation (IASCF), which oversees the International Accounting Standards Board (IASB), published for public comment a Discussion Document entitled: “Review of the Constitution: Public Accountability and the Composition of the IASB - Proposals for Change.” The comment deadline is Sept. 20.
In a world that is rapidly moving toward convergence of accounting standards around International Financial Reporting Standards (IFRS) published by the IASB - including the expected issuance by the U.S. Securities and Exchange Commission (SEC) of a ‘roadmap’ to consider permitting – or requiring – U.S. companies to file with the SEC in IFRS instead of U.S. Generally Accepted Accounting Principles (U.S. GAAP), (see SEC Chairman Christopher Cox’ May 28 speech at IOSCO’s annual conference, and SEC Division of Corp Fin Director John White’s June 5 speech at an FEI conference) - the IASCF’s Discussion Document contains two proposals that have been fast tracked, with a proposed effective date of Jan. 1, 2009. The proposals contained in IASCF’s Discussion Document released today would:
Establish a formal link between the IASCF and a new Monitoring Group. The Monitoring Group would be autonomous, and would be comprised of “public authorities generally charged with the adoption or recognition of financial reporting standards and international organisations with a mandate that includes facilitating the development and effective functioning of capital markets.”Specifically, when first formed, the Monitoring Group is proposed to include: the responsible member of the European Commission, the managing director of the IMF, the chair of the International Organization of Securities Commissions (IOSCO) Emerging Markets Committee, the chair of the IOSCO Technical Committee, (with certain exceptions if that person is from a geographic region already represented), the commissioner of the Japan Financial Services Agency, the chairman of the SEC, and the president of the World Bank. The Monitoring Group would be responsible for approving the selection of IASCF Trustees, and can recommend Trustees. Additionally, The IASCF Trustees would report to the Monitoring Group regularly “to enable [the Monitoring Group] to address whether and how the [IASCF] Trustees are fulfilling the requirements set out in the Constitution.” The items which IASCF is responsible for according to the constitution include: appointing members of the IASB, overseeing its funding, supporting the ‘use and rigorous application’ of IASB’s standards, and overseeing IASB’s: strategy, “including consideration, but not determination, of the IASB’s agenda,” operating procedures, consultative arrangements, and due process (including associated with feedback statements and impact assessments).
Expand the membership of the IASB from its current size of 14 members, to a total of 16 members, and specify a geographic breakdown for those members. Previously, there were no specific geographic requirements for board members of the IASB (although there are existing geographic requirements for the IASCF Trustees). The geographic distribution proposed for the IASB board (updated from earlier draft proposals presented at constitutional roundtables) would include: four members from the Asia/Oceania region; four members from Europe, four members from North America, one member from Africa; one member from South America; and two members appointed from any area, subject to maintaining overall geographical balance
As noted in IASCF’s press release issued today, in addition to the proposals contained in the Discussion Document released today, on which comments are due Sept. 20, the IASCF will seek input on additional proposals relating to their constitution later this year (and the expected proposed effective date on those additional proposals is currently expected to be Jan. 1, 2010.)
IASCF begins search for new board members, trustees, SAC members
Separately, the IASCF recently reported on the results of other matters deliberated by the IASCF Trustees at their meeting earlier this month in Washington, DC. Among those matters was to approve commencement of a search assisted by executive recruitment firm Spencer Stewart to begin to identify nominees to fill vacancies for IASB board members which will arise in 2009, 2010 and 2011. (A minimum of 8 such vacancies are expected to arise.) Also, the IASCF is commencing a search for three new IASCF trustees who have served their second term or are otherwise not renewing for a second term, including one trustee from North America.
Additionally, the IASCF Trustees agreed to change the membership structure of the IASB’s Standards Advisory Council (SAC) [similar in function to FASB’s Financial Accounting Standards Advisory Committee or FASAC]. Under the new structure approved by the IASCF Trustees, members of the SAC would serve primarily as representatives of organizations. The IASCF notes this change may be further considered during the second part of their constitutional review later this year. The IASCF states they will begin seeking candidates for the SAC soon, since the terms of all SAC members expire this year.
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