Comments from ACCA to the International Accounting Standards Board, February 2011.
ACCA (Association of Chartered Certified Accountants) is pleased to have this opportunity to comment on the above public consultation paper which was considered by ACCA's Financial Reporting Committee. We will also be responding in due course to the consultation launched by the Monitoring Board which to some extent covers the same ground as this. The IFRS Foundation needs to act in a co-ordinated way on the results of these two consultations.
ACCA'S ANSWERS TO IFRS FOUNDATION'S QUESTIONS
Mission (Q1 and 2)
The problem with the current mission statement in the constitution is that it is open to different interpretations as to whose needs are primarily driving the development of the standards - the participants in the capital markets or "other users" who might include prudential regulators for example.
The advantages equally are that it is flexible to accommodate the known variety of actual users and does not place one group as pre-eminent.
We note in terms of objectives that:
Governance (Q3 and 4)
The IASB as the independent standard setter, the Trustees and the Monitoring Board form the current three tier structure of the IFRS Foundation. This is arguably a bit complex and if the principal issues in the governance of global standard setting are the need to balance the independence of the standard setter and its accountability to the public interest then this would ideally be met by a two tier structure. Namely an independent standard setting board and a single oversight body that might be rather different from the present trustees, probably with mainly a composition from political authorities or their direct agencies and so more like the Monitoring Board.
However in our view the three tier structure including the oversight by the Trustees should continue because:
Maintaining the current three tier structure will create issues with the relative roles of the Trustees and Monitoring Board especially when it comes to the responsibility for the direction of development of IFRS.
Process (Q5 and 6)
The determination of the agenda of the IASB is a critical factor and the need for regular consultation with its constituents on this is vital.
The process for agenda decisions should recognise that:
- the elimination of gaps
- addressing serious failures
- reducing complexity
We would agree that IASB should be looking to how they can assist with implementation and consistent application but their remit should remain with setting the standards and not their enforcement.
Financing (Q7)
We support the essential characteristics of a funding system for global standards that have been identified by the trustees, that it should be:
It is important that continuing progress is made to put in place such a system and move away from the current position where the IFRS Foundation would seem too dependent on voluntary contributions from certain interested parties towards publicly organised levies.
As a global standard setter IASB should allow free access to the standards and supporting material via its website. In the current environment it is not appropriate for users to have to pay for access, as they do at present. This is not a sustainable income stream for IASB and as soon as practicable the access fees should be replaced by other forms of funding.
Other issues (Q8)
We re-emphasise our support for an independent standard setting board. The IFRS Foundation should continue on the present model of a board of mostly or all full-time members. There should, however, be changes to ensure:
IASB need to ensure that they are at the heart of the development of integrated reporting as that develops over the next year or two.