IASB Funding

In September 2009, the International Accounting Standards Committee Foundation (IASC Foundation) released Proposals for Enhanced Public Accountability as part two of its constitution review process. Public comments were due by November 30, 2009 and the IASC Foundation is expected to complete part two of its constitution review in the second quarter of 2010.

In seeking advice on issues to be addressed, the IASC Foundation reached out to constituents in December 2008. Many of the proposals put forth by the IASC Foundation cover the themes that emerged from the consultation. However, missing from the list is the issue of funding.

The IASC Foundation notes in its proposals document that many commentators urged the Trustees to strengthen the independence of the IASC Foundation further by ensuring a stable and sustainable funding base in the form of government-sponsored levy systems. However, specific proposals for achieving this are not included in the proposals listed in part two of the constitution review.

Achieving a secure, stable funding mechanism is a critical milestone in the SEC’s IFRS roadmap. While the IASC Foundation has made progress in developing government-sponsored funding systems, a large portion of the organization’s funding still comes from voluntary contributions from companies and accounting firms.

Exclusion of a proposal that specifically deals with the issue of how the IASC Foundation will achieve stable, secure funding that assures independence is surprising, especially given how important this is to the U.S. decision whether to adopt IFRS.  In a U.S. roundtable of accounting leaders that met to discuss IASC Foundation constitutional issues. Speaking at the roundtable, AICPA Chairman Barry Melancon called for permanent, independent funding source for the IASB.

The IASC Foundation Trustees is responsible for fund raising activities. However, they do not have the authority to require automatic funding mechanisms from jurisdictions that use IFRS. Regardless, it would seem appropriate to address funding concerns in part two of the IASC Foundation’s constitution review process.

Share your thoughts on the importance of the IASB’s funding source. Do you believe it should be a component of the IASC Foundation’s constitution review?

- Paul Parks | www.IFRS.com

Comments

[Joe Jefferis]

A single set of standards is a great concept. I favor a single set of standards which do not permit mark-to-market speculative valuations on balance sheets. The single standards should promote and protect capitalism, require realizing actual profits from arm's length transactions, be void of political influence (mathematics), and general economic value decision by elite global "CPA" consensus.

IFRS does not meet this minimum requirement. Mark-to-market failed to require selling at a profit and created fantasy "what if" equity valuations when we experimented with it from 2006-2008. "What if" optimism was a major contributing factor during the financial crisis of 2008. We did not have a financial crisis in the USA until after oil prices collapsed between July 2008 and September 2008.

IFRS is bad for free enterprise capitalism, but great for global elitists, global socialists, and anti-capitalism groups around the world.

USA sovereignty is not worth surrendering. We are just now learning about the root causes of the man caused disaster we refer to as the financial crisis of 2008.

Reinstate Glass-Steagall and reinvigorate financial competitiveness before worrying about what the global socialists desire.

[John Dallosta]

This whole thing is a bad idea. More power for the people sitting in ivory towers making rules that the people working have to apply. Things need to be simplified. Leave GAAP alone.

[aion kinah]

It would take years for them to understand IFRS and its impact on lending.

[Aftab Khan]

I really do not think that IFRS is a bad idea. They are being implemented across the world and would be great to have a single set of standards that promote comparability across a particular sector.

And its not wiping out US GAAP, infact its converging it in such a way that US GAAP and IFRS are equal in all practical terms. Just the way UK GAAP is being converged. A number of UK GAAP standards are really a copy of the IFRS and over the last couple of years and in two more years to come both UK GAAP and IFRS will be the same.

What's the harm in this?

[RJ Brandenburg]

I agree that IFRS is a bad idea.

There is no single set of "standards" today. Many countries have bowed to various industries to bend the rules. Which IFRS would the U.S. adopt?

The lenders in this country know what to expect from GAAP. It would take years for them to understand IFRS and its impact on lending. We already have a national lending problem. IFRS would make that problem much worse.

If the world really wants a single standard let them adopt U.S. GAAP. It has been developing for over 50 years. Do we need another half century to develop IFRS?

Please do not fund any further IFRS activity.

[Kelley A. Cook, CPA]

The International Accounting Standards are a bad idea. They should be stopped immediately before it destoys our American economy. We are the standard setters and should not and do not need the stupid rediculous idea of changning (ie weakening) our reporting standards to fit those outside of our country. Please DO NOT FUND this committee, foundation or whatever you may call it. STOP NOW!!!!! You do not have our support. We will never support it or lower our standards.