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December 14, 2008

International oversight body starts part two of constitutional review

The due process followed by the International Accounting Standards Board (IASB) is one item the board’s oversight body is seeking feedback on in part two of its five-yearly constitution review.

The first part of the International Accounting Standards Committee Foundation’s (IASC) review, which involved establishing a monitoring group and expanding the number of IASB members from 14 to 16, is nearing completion and the IASC’s trustees are now welcoming comment on any constitutional issue. They are particularly interested in a series of topics outlined in a new consultation document.

Whether the current due process takes too long, and if so, which parts of the existing procedures should be shortened or eliminated, is one such issue.

The trustees have also asked whether there could be a separate fast track due process procedure for urgent cases.

Whether the constitution should make specific reference to an emphasis on a principle-based approach to standards is another topical issue, as is whether the standard setter should broaden its remit to include setting standards for entities such as those in the not-for-profit and public sectors.

The IASB’s agenda-setting process is another item for discussion, particularly any potential impact on the board’s independence.

The trustees also acknowledge there are organisations that establish standards that are based on, or have a close relationship with, IFRS. The IASC already recognises the need to collaborate closely with accounting standard-setting bodies, but the trustees are now considering whether the constitution should be amended to allow for closer collaboration with a wider range of organisations whose objectives are compatible with the IASC’s objectives.

The IASB’s funding is also being considered. The document notes that while the trustees have made progress towards establishing a broad-based funding system that helps to ensure the independence and sustainability of the standard-setting process, they still have no authority to impose a funding system on IFRS users.

Comments are due by 31 March 2009.

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