Revised IASB Constitution Calls for 'Principle-Based' Adoption of IFRS

To enhance public accountability, stakeholder engagement and operational effectiveness, the Trustees of the International Accounting Standards Committee (IASC) Foundation, the oversight body of the International Accounting Standards Board (IASB), on Monday announced enhancements to their governance arrangements, completing the second part of the IASC Foundation’s five-yearly review.


Following more than a year of global public consultation, the Trustees have agreed on a three-yearly public consultation on its future technical agenda, in addition to consulting the Trustees and its advisory council annually on the existing and future agenda.


Another change is the constitution emphasises that convergence is a strategy aimed at promoting and facilitating the adoption of IFRSs, but is not an objective by itself. The constitution will also call for a commitment to a "principle-based" approach.


The new constitution, will be put into effect on 1 March 2010, also specifically identifies investors as a target audience for financial information. Another change is that the constitution will include a provision for an accelerated due process only in the most exceptional circumstances and only after approval by at least 75% of the Trustees.


The changes will also include the creation of vice-chairman positions for both the IASB and its oversight body.


In addition to the constitution changes, and in response to comments received, the Trustees will review this year future strategy for the period post mid-2011. The Trustees will also undertake and complete, by year-end, a review of the IFRS Advisory Council to assess the recent reforms to its structure and operations, and determine whether further reforms are necessary.


Meanwhile, in response to a Financial Times article which reports that the constitutional emphasis on the objective of IFRS adoption globally represents a weakening of the Trustees’ support for ongoing convergence efforts, Gerrit Zalm Chairman of the Trustees, IASC Foundation, states that "recent enhancements to the constitution of the IASC Foundation reinforce our commitment to this process."


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