The changes to the International Accounting Standards Committee Foundation’s (IASCF) constitution are too timid and represent a missed opportunity, according to BDO International chief executive Jeremy Newman.
The IASCF, which oversees the International Accounting Standards Board (IASB), this month announced changes that aim to enhance its public accountability, stakeholder engagement and effectiveness.
Improved governance of the IASCF and IASB is a major factor of consideration for most jurisdictions that are considering adopting IFRS, such as Japan, and Newman is concerned the changes don’t go far enough.
Newman wrote in a blog post that there should be a more fundamental review that acknowledges the changes that will be required over the coming years as a number of additional, significant, jurisdictions adopt IFRS.
“There needs to be a clear signal that there will be a further overall review of the constitution in the near term,” Newman said.
The changes represent the second part of the foundation’s five-yearly constitutional review and include:
• The introduction of a three-yearly public consultation on the IASB’s technical agenda;
• Emphasis that convergence between IFRS and US GAAP is a strategy aimed at promoting and facilitating the adoption of IFRS, not an objective in itself;
• A commitment to a principles-based approach to standards;
• A requirement for due process that includes provision for an accelerated due process only in the most exceptional circumstances and after approval by at least 75 percent of the trustees;
• The creation of vice-chairs of the IASC Foundation and the IASB;
• A reduction in the duration of the second term of IASB members from five to three years to ensure recent practical experience. The chair and vice-chair would be exempt from this reduction;
• The IASC Foundation will be renamed the IFRS Foundation, and the interpretations committee and advisory council will be known as the IFRS Interpretations Committee and IFRS Advisory Council. The IASB will retain its name.
The new IASCF consultation will come into effect on 1 March.