The International Accounting Standards Board (IASB) will be renamed the IFRS Board if proposals included in the second part of the International Accounting Standards Committee (IASC) Foundation’s constitution review are accepted. The IASC Foundation, which oversees the IASB, would be renamed the IFRS Foundation.
The proposals form the second stage of a two-part review of the IASC Foundation constitution.
The review takes place every five years, the most recent being in 2005. On this occasion the process was split into two stages to fast track some urgent matters.
The first stage was completed in January this year and resulted in the establishment of a monitoring board of capital markets authorities to oversee the work of the IASC Foundation. It also expanded the IASB from 14 to 16 members and introduced guidelines for geographic diversity on the board.
The objective of the proposals in the second stage of the review is to further enhance the governance of the IASC Foundation, improve the involvement of stakeholders and make operational improvements.
The five key proposals are:
• Enhance the IASB agenda-setting processes by making the board consult on its standard-setting agenda with the trustees of the IASC Foundation and the Standards Advisory Council. Other stakeholders could also comment;
• Emphasise the importance of the IASB liaising with organisations including accounting standard setters and other official organisations with an interest in the standard-setting process;
• Establish a procedure for an accelerated due process where a shorter period of consultation could be held when major unforeseen developments arise;
• Mandate a geographic balance within the IASC Foundation trustees, similar to that introduced for the IASB earlier this year; and,
• Change the name of the IASB to the IFRS Board and the IASC Foundation to the IFRS Foundation to provide further clarity regarding their missions.
The move to enhance the governance of the IASC Foundation and improve the IASB’s standard-setting process will be welcomed by many jurisdictions around the world, including the two largest.
Both the US and Japan have said governance must be improved before they adopt IFRS.
The closing date for comments on the proposals is 30 November.