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?
