Trustee Involvement in the Standard-Setting Process

As noted earlier, the Trustees have the direct and primary responsibility to oversee the IASB. The Trustees established the DPOC in 2006 to play a more active and visible role in the

201 See id. 202 See id. 203 See id. 204 See id. 205

See MB MoU; see also IFRS Foundation Constitution.

206

See IFRS Foundation Constitution.

207

See id.

208

See MB MoU.

209

See MB MoU; see also IFRS Foundation Constitution.

210

See IFRS Foundation Constitution.

211

oversight of the IASB’s due process.212 The DPOC meets with the IASB regularly to monitor its compliance with due process procedures, to review complaints regarding the IASB’s due

process, and to assess other areas of concern related to the IASB’s due process activities.213 As noted earlier, the Trustees are excluded from involvement in technical matters that are reserved for the IASB.

As a result of the Trustees’ Strategy Review, the Trustees decided that the framework for oversight of the IASB’s due process should be clarified.214 In particular, the Trustees’ DPOC should review and discuss due process compliance regularly throughout the standard-setting process and at the end of the process before a standard is finalized.215 The DPOC should report regularly on these activities to the Trustees and in its annual report.216 Respondents to the 2011 Public Consultation on the whole expressed overwhelming support for the need for the Trustees’ DPOC to monitor due process throughout the entire standard-setting process, rather than

reviewing the process only at the end.217 Respondents supported the idea that due process should be reviewed and further enhanced regularly.218

b. Post-Implementation Reviews

According to the DP Handbook, the IASB, rather than the Trustees, is responsible for carrying out post-implementation reviews of new IFRSs and major amendments.219 Post-

implementation reviews are normally to be conducted two years after new requirements in IFRSs have become mandatory and have been implemented.220 Such reviews are supposed to be

limited to important issues identified as contentious during the development of the

pronouncement with consideration given to any unexpected costs or implementation problems encountered.221

212

See Strategy Review Final Report.

213 See id. 214 See id. 215 See id. 216 See id. 217

See IFRS Foundation Staff Comment Summary.

218

See id. See also comment letter of TCHA on the 2011 May Staff Paper (“We note that the Trustees of the IFRS Foundation have established a special committee, the Due Process Oversight Committee, with the task of regularly reviewing and, if necessary, amending the procedures of due process in light of experience and comments from the IASB and constituents. We believe this ongoing review is essential to continue to ensure that the IASB’s standard-setting process is robust, accessible and transparent.”).

219

See Strategy Review Final Report (citing DP Handbook).

220

See id.

221

In July 2011, the IASB launched its first formal public agenda consultation on its future work plan.222 In the 2011 Agenda Consultation, the IASB described its current process for post- implementation reviews of IFRSs, consistent with the DP Handbook. Many respondents to the 2011 Agenda Consultation expressed the view that the current scope of the IASB’s post-

implementation reviews is too narrow and should be expanded to consider issues such as whether or not the objective of the IFRS was achieved and whether the IFRS or major amendment has resulted in more useful information for investors and other users.223 Similar comments were made by some respondents to the 2011 Public Consultation as part of the Trustees’ Strategy Review.224 Additionally, some respondents to the 2011 Agenda Consultation suggested that the post-implementation review process should be altered in a manner to give it greater transparency and independence.225 Some suggested that the IASB should not be involved in the process in order to enhance the credibility of the work.226 In particular, some suggested that the post- implementation review process should be steered by the IFRS IC or by a committee drawn from the Trustees that reports directly to them.227 Comments in response to the Trustees’ 2011 Public Consultation included a recommendation that the post-implementation review be carried out by national standard setters or other accounting bodies, which would improve the IASB’s and the IFRS Foundation’s public accountability.228

The Staff notes that post-implementation reviews of FASB standards are conducted by the FAF, and the process is designed to be independent of the FASB’s standard-setting process. The staff who conduct the post-implementation reviews of FASB standards report to the FAF Board of Trustees and the FAF President/CEO, but members are drawn from experienced FASB and GASB staff.229

The Staff believes the IFRS Foundation and Trustees should consider altering the

reporting structure for post-implementation reviews of IFRSs. As suggested by commenters, the Staff believes that the staff working on the post-implementation reviews should report directly to

222

See IASB, Agenda Consultation 2011: Request for Views (Jul. 2011) (“2011 Agenda Consultation”) (available at:

http://www.ifrs.org/Current+Projects/IASB+Projects/IASB+agenda+consultation/IASB+agenda+consultation.h tm).

223

See IASB Staff Paper, Agenda Paper 5A: Request for Views—Agenda Consultation 2011: Comment letter summary (Jan. 2012) (“IASB Staff Paper—Request for Views”) (available at:

http://www.ifrs.org/Meetings/IASB+January+2012.htm).

224

See IFRS Foundation Staff Comment Summary.

225

See IASB Staff Paper—Request for Views.

226

See id.

227

See id.

228

See IFRS Foundation Staff Comment Summary.

229

See FAF, The FAF’s Post-Implementation Review Process (available at:

http://www.accountingfoundation.org/cs/ContentServer?site=Foundation&c=Page&pagename=Foundation%2F Page%2FFAFSectionPage&cid=1176159625382).

the Trustees rather than the IASB. The public will likely regard the post-implementation reviews as more credible if the IASB is not directly reviewing its own work.