The monitoring body of the IFRS Foundation has
said convergence must not be a substitute for adoption of IFRS in
the push towards one set of global accounting standards.
In its strategic review of the IFRS
Foundation, the IFRS Trustees reaffirmed the commitment to their
vision of IFRSs, as developed by the International Accounting
Standards Board (IASB), saying the standards should be adopted in
their ‘entirety and without modification’.
This affirmation is poignant because one of
the main focuses in the first decade of the IASB has been
convergence, particularly with US GAAP although the Trustees assume
there will be a positive response on adoption from the US and other
large economies such as Japan soon.
The Trustees state that ‘failure to make such
commitments’ may result in the strategy being re-reviewed
subsequently leading to changes to the Trustees and the IASB
composition.
Another important recommendation is for the
Foundation to work with national and international market and audit
regulators, accounting standard-setters, regional bodies and
accountancy bodies to find out ‘where adoption of IFRSs is
incomplete or where there is divergence from the full set of IFRSs
as issued by the IASB’.
The Trustees also called for the Foundation to
work towards gaining a better understanding of how standards are
being implemented around the world to improve the quality of the
IFRSs.
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By GlobalDataGovernance
The IFRS Foundation Monitoring Board then
underlined the importance of the standard setter’s independence,
with regards to accounting standard-setting and the selection of
board membership especially on the back of much political pressure
in the years since the financial crisis, in its governance
review.
However, the Monitoring Board said there was
opportunity for ‘improved communications and procedures in relation
to the IASB agenda and chairmanship without infringing on its
independence’ to ensure selections will position the IASB to fulfil
capital markets’ demands for high quality standards.
“We strongly believe that the measures
identified herein will further improve the current governance
mechanism while enhancing transparency of its performance. We hope
that increased accountability will be reflected through
stakeholders’ confidence in the standard-setter and hence IFRSs.”
IFRS Foundation Monitoring Board acting chairman Masamichi Kono
said.
The two monitoring bodies reaffirmed their
commitment to continue to work closely “for a full implementation
of the ideas contained in this joint package”.
