ICAEW warns against IFRS Foundation proposals

The Institute of Chartered Accounts in England and Wales (ICAEW) has warned that proposed changes to IFRS Foundation governance structure could damage the credibility of global accounting standards.

ICAEW financial reporting faculty head Nigel Sleigh-Johnson said the institute is concerned that widening the monitoring board remit could potentially damage the independence of the International Accounting Standards Board (IASB), which would “ultimately endanger the credibility of international financial reporting”.

In February, the IFRS Foundation proposed its Monitoring Board was involved in the selection of the IASB chair, could place items on the IASB agenda and should establish a permanent secretariat.

“The IASB’s oversight structure is already complex. Expanding the Monitoring Board’s role would create overlaps with the other oversight bodies and increase complexity,” Sleigh-Johnson said.

“It is also vital that technical independence of the IASB is protected. In order to maintain public confidence, it is essential that standards setters are not placed in a position where they could encounter undue political influence. Some of these proposals could open the way for this to happen, which would mean the IASB’s work becoming unduly politicised.”

Sleigh-Johnson said if IFRS was altered to suit the needs of regulators rather than investors, there would be confusion over its objectives and this could lead to a loss of confidence in financial reporting.

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