21 September 2016

Deloitte, FEE: Comment letters to IFRS Foundation on the review of its constitution

Deloitte and FEE have published their comment letters on the proposed amendments to the IFRS Foundation Constitution that are the result of the Trustees 2015 review of structure and effectiveness of the IFRS Foundation.

Deloitte:

• supports the proposal to have three geographical regions to be used throughout the IFRS Foundation when determining the distribution of Trustees and the IASB and other appointments;
• disagrees with the proposal to reduce the size of the IASB from 16 to 13 members;
• does not support reducing the number of meetings of the Advisory Council from three meetings per year to two; and
• encourages the IFRS Foundation Trustees to act much more as a body of non-executive directors.

Full comment letter

FEE

FEE expressed its disagreement with the proposal to reduce the size of the board and raised its concerns for any potential unintended negative impacts this might have on the quality of the work conducted by the IASB, especially in a time when greater emphasis on quality is necessary. FEE consequently believes that the Board should maintain its current structure and size of fourteen members.

In FEE´s view, the primary users of the IFRS being preparers, investors and other capital providers (primary users as defined in the IFRS Conceptual Framework) and auditors (who ensure an adequate level of trust), should be properly represented in the composition of the IASB. To ensure this representation and to ensure that Board members have a proper background and professional experience with applying the standards, a reference to “practical” experience is crucial.

Members of the IASB who represent other groups of secondary users, mainly regulators and academics, contribute not only to the technical expertise of the Board, but also to the global acceptance of the final IFRSs by different jurisdictions. Having recognised their contribution, FEE believes the number of Board members who have a professional market regulator background is currently sufficient to achieve the objectives stated above.

Full comment letter