20/12/2015 - EFRAG's Response to the Trustees' Review of Structure and Effectiveness
The IFRS Foundation published its Request for Views Trustees' Review of Structure and Effectiveness: Issues for the Review in July 2015 with a comment deadline of 30 November 2015. The Request for Views addresses three main areas: relevance of IFRS; consistent application of IFRS; and governance and financing of the IFRS Foundation.
EFRAG's letter is addressing the issues in relation to the primary strategic goals and not with governance and financing issues that have been considered by the European Commission in its letter to the Trustees of 1 December 2015. EFRAG received 20 comment letters which have been carefully considered in arriving at the final EFRAG letter. EFRAG has published together with its letter a feedback statement on the comments received.
EFRAG's main observations in its letter are:
- The IFRS Foundation/ IASB should not extent the scope of its standard-setting activities by developing standards for the public sector or the not-for-profit sector;
- Financial reporting should remain the focus of the IFRS Foundation. However, the Trustees should ensure that the IFRS Foundation is at the forefront in terms of vision and consistency of all reporting developments, so as to maintain and enhance the relevance of financial reporting under IFRS in the wider corporate reporting arena;
- The IFRS Foundation should continue to develop and maintain an IFRS Taxonomy in order to control the quality of the Taxonomy. However, IFRS Taxonomy considerations should not drive the standard-setting process;
- Whilst the objective of consistent application of IFRS remains a strategic objective, the IFRS Foundation should take all steps necessary to avoid any development taking IFRS away from a principle-based set of standards;
- EFRAG believes that Post-Implementation Reviews should now be regarded as a useful tool in IASB's Research activities, helping identify what works and what is in need for improvement in current practice, regardless of the date at which a standard has been issued; and
- Trustees should examine and reconsider the effectiveness of its due process oversight. A due process oversight addressing the substance of the complaints will be a major step forward in building the buy-in of the various jurisdictions around the world.
EFRAG's Letter can be accessed below.
EFRAG's feedback statement can be accessed here.