Trustees review of structure and effectiveness: proposed amendments to the IFRS Foundation constitution Exposure draft issued in June 2016 Comments from ACCA 6 September 2016 ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We support our 178,000 members and 455,000 students in 181 countries, helping them to develop successful careers in accounting and business, with the skills needed by employers. We work through a network of 92 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting, and conduct relevant research to ensure that accountancy continues to grow in reputation and influence. www.accaglobal.com Further information about ACCA s comments on the matters discussed here may be obtained from the following: Richard Martin Head of Corporate Reporting, ACCA Telephone: +44 (0)20 70595748 Email: richard.martin@accaglobal.com ACCA +44 (0)20 7059 5000 info@accaglobal.com www.accaglobal.com The Adelphi 1/11 John Adam Street London WC2N 6AU United Kingdom
ACCA welcomes the opportunity to provide views in response to the exposure draft issued by the IFRs Foundation. This has been done with the assistance of the members of ACCA s Global Forum for Corporate Reporting. They have considered the questions raised and their views are reflected in the following comments. SPECIFIC COMMENTS ON THE PROPOSED AMENDMENTS Proposal 1 Geographical balance of trustees We accept that the new formulation of six trustees from the Americas rather than North and South separately is better than the current formulation. We also prefer the proposal that at large trustees are not set at five but at three. We do not consider, however, that these changes adequately deal with the issue of balancing the governance of the Foundation with the usage of the standards and the pattern of funding. Given their role with regards to financing the Foundation, in our view paragraph 6 needs to refer to the mix of trustees as reflecting the funding of the organisation as well as the world s capital markets. We would prefer that the trustees at large category would be deleted as we find the phrase overall geographical balance unhelpful, in that it either means a pro rata allocation of these places or places no limits on these three appointments. Proposal 2 Professional background of trustees We agree with the deletion of the reference to prominent international accounting firms. We note however that some prominent accountancy firms are among the major sources of funding for the IFRS Foundation and so that would be reflected in the appointments made if the amendment was made to paragraph 6 as noted above. 2
Proposal 3 Trustee remuneration We have no objection to this change. Proposal 4 Focus and frequency of reviews We support the broad aim of this amendment. We do however note that the particular wording in 17(c) means that one review would begin five years after the last concluded. This could well mean that in effect reviews are more like seven years apart based on previous experience. We think 17(c) should simply conclude and publish proposals of that review for public comment at least every five years. Proposal 5 Size of the IASB We agree with the reduction of the board size as proposed. Proposal 6 Professional background of IASB We are concerned that the IASB should represent a reasonable balance of backgrounds of practical experience and we consider that the maintenance of that balance should be referred to in paragraph 25. The backgrounds of investors, preparers and auditors are the most relevant and important as the key participants in the financial reporting process. Recent professional experience in these three areas should be predominantly the backgrounds of the IASB members and we do not think this is currently the case with the present IASB. Proposal 7 Geographical balance We have similar reactions to these proposals as those in Proposal 1 with regard to trustees. It seems to us that geographical origin is a less important consideration in the appointments of IASB members as compared to the appointment of trustees. If, however, there is to be a specified geographical balance of the board then equal 3
numbers from the Americas as compared to Europe and Asia/Oceania looks wrong given the usage of the standards in different jurisdictions. Proposal 8 terms of reappointment We agree with the proposal to allow for ten year terms for some or all board members. Proposal 9 Voting requirements We agree with the proposals and note that the issuance of a new or revised standard will require a significant majority (nine out of thirteen) of the board voting in favour. Proposal 10 Advisory Council We have no objection to this amendment. 4
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