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Environm Ciencia, Tecnologia y Economia

Reforming the governance of the International Financial Reporting Standards system

Posted by benjamin-nicolau en octubre 10, 2008

Reforming the governance of the International Financial Reporting Standards system 

 

Parliament has set out its views on the proposal for a high-level Monitoring Group to oversee the bodies that develop International Financial Reporting Standards. MEPs are supportive of the proposal on the initial membership of the Group, but are doubtful about the value of setting it up until its role and powers have been clarified.

International Financial Reporting Standards are developed by the 14-member International Accounting Standards Board, which is appointed and overseen by the trustees of International Accounting Standards Committee Foundation, a private sector, not-for-profit organisation.  Earlier this year, Parliament adopted a report criticising these governance arrangements and calling for greater accountability in the system.   The IASCF has since proposing setting up a high-level Monitoring Group as part of reforms to address these concerns.
 
In a resolution adopted on Thursday by 568 votes in favour to 27 against with 43 abstentions, Parliament says this Monitoring Group should be entitled to recommend candidates as Trustees and be responsible for approving the selection of Trustees after an agreed nomination process. It calls for the Group to be involved in setting the agenda for the IASB so as to ensure transparency and accountability, while recognising that the subsequent accounting standard setting process should remain free of undue interference and should be done in full consultation with all stakeholders, including investors. 
 
Not enough clarity on role and powers?
 
Parliament expresses doubts about setting up the Monitoring Group at this stage, before a further consultation is launched and without a clear overview of the relationship to be established between the MG and the IASCF.  It does not agree with the proposed make-up of the group, saying that the IMF and World Bank should not be represented, but should instead include the chair of the Basel Committee on Bank Supervision among others.
 
MEPs say the membership of the Monitoring Group should reflect the balance of the world’s most significant currency areas, cultural diversity, and the interests of both developed and emerging economies and of international institutions which have accountability requirements before public authorities.  They are supportive of the initial proposal for its membership, but want to ensure EU market regulators are also represented and that no one organisation or country should have more than one representative. 
 
No need for an International Accounting Advisory Group
 
Parliament deplores the fact that it was not consulted on the Commission’s plans for an International Accounting Advisory Group in addition to the Monitoring Group.  
 
MEPs say membership of the Group should become effective only after the bodies represented have committed to introducing IFRS as their domestic accounting standard. 
 
Parliament wants to agree a Memorandum of Understanding on the association of legislators with the work of the Monitoring Group. 

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