The world’s largest securities regulators have proposed the International Accounting Standards Committee (IASC) Foundation establish a new monitoring body for the International Accounting Standards Board (IASB) in order to improve public accountability.
The authorities, who include European Commissioner for Internal Market and Services Charlie McCreevy, Financial Services Agency of Japan commissioner Takafumi Sato, International Organization of Securities Commissions executive committee chairperson Jane Diplock and US Securities and Exchange Commission chairman Christopher Cox, plan to flag the idea in collaboration with the IASC during a 2008 review of the foundation’s constitution. They said a monitoring body would complement the IASC trustees in its representation of the interest of the global investor community, thereby enhancing public confidence in IFRS.
The regulators said: “We have a common interest of ensuring continuing user confidence in the institutions responsible for the development of global accounting standards. A natural step in the institutional development of the IASB and the IASC Foundation would be to establish a means of accountability to those governmental authorities charged with protecting investors and regulating capital markets. We will work together to achieve these objectives.”
A key objective of the monitoring body would be to meet regularly with IASC Foundation trustees to discuss, review and comment on the IASB’s work programme, the regulators explained. The monitoring body would have a role to play in the selection of trustees and be responsible for the final approval of trustee nominees. Finally, the regulators propose the body would have the opportunity to review the trustees’ procedures for overseeing the standard-setting process and ensure the IASB’s proper funding.
The announcement follows the IASC’s own strategy review of its governance and public accountability issues. The trustees announced several proposals to improve accountability, including expanding the funding regime, establishing a formal reporting link to official organisations and developing a multi-layered approach to accountability.
IASC GOVERNANCE REVIEW
Key proposals to enhance public accountability
Global regulators • Establish a monitoring body within IASC governance structure to review and comment on the IASB’s work programme. Body would represent interests of the global investor community.
IASC Foundation proposals
• Establish a formal reporting link to official organisations including securities regulators;
• Deepen engagement and receive input from organisations and key stakeholders outside of formalised procedures;
• Create a mechanism for public input to the trustees outside regularly scheduled meetings with specific stakeholder groups; and
• Continue efforts towards a sustained, broad-based funding regime.