Annual Report 2008 IASC Foundation
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IASC Foundation Annual Report 2008 IASC Foundation Goal The objective of the IASC Foundation is to develop a single set of high quality, understandable and enforceable accounting standards to help participants in the world’s capital markets and other users make economic decisions. Global adoption Over 100 countries now require or permit the use of IFRSs. Highlights 2001 2002 2003 2004 Formal incorporation of European Union passes IASB issues first new IASB improvements and the IASC Foundation. regulation to adopt IFRSs for standard — IFRS 1 First-time stable platform of IFRSs IASB begins work listed businesses beginning Adoption of International completed in first quarter 1 January 2005 Financial Reporting Standards IASB seeks broader stakeholder IASB and FASB announce Australia, Hong Kong, engagement through enhanced initiative to achieve New Zealand and South Africa due process convergence of financial commit themselves to reporting standards and adoption of IFRSs to co-ordinate future work programmes Contents Page 1 Report of the Chairman of the IASC Foundation Trustees 2–9 2 Meeting the public accountability challenge: report on the Trustees’ oversight activities in 2008 10–13 3 Securing a stable and independent basis of funding 14–18 4 Report of the Chairman of the IASB 19–47 5 Trustees of the IASC Foundation 48–50 6 Members of the International Accounting Standards Board 51–52 7 Members of the International Financial Reporting Interpretations Committee 53 8 Members of the Standards Advisory Council at the end of 2008 54–56 9 Senior staff 57 10 Report of the independent auditors 58 11 Statement of comprehensive income 59 12 Statement of financial position 60 13 Statement of cash flows 61 14 Notes to the financial statements 62–73 15 2008 Financial supporters 74–78 16 IASB documents current at 1 January 2009 79–80 2005 2006 2007 2008 In Europe nearly 7,000 listed IASB and FASB agree Brazil, Canada, Chile, India, Japan Israel, Malaysia and Mexico businesses in 25 countries Memorandum of and Korea all establish time lines to adopt IFRSs simultaneously switch to IFRSs Understanding for to adopt or converge with IFRSs US publishes ‘roadmap’ for advancing convergence US SEC Chief Accountant US SEC removes reconciliation of IFRSs and US GAAP IFRS adoption, update of publishes ‘roadmap’ requirement for non-US IASB-FASB MoU released describing steps towards the China adopts accounting companies reporting under IFRSs, removal of the reconciliation standards substantially in line and consults on IFRSs for IASB pursues comprehensive requirement by 2009 with IFRSs — ultimate goal of domestic companies response to the financial crisis full convergence Over 100 countries now require or permit the use of IFRSs Annual Report 2008 1 1 Report of the Chairman of the IASC Foundation Trustees The financial crisis gripping the world’s capital markets is the most significant challenge facing economic policymakers and regulatory bodies since the 1930s. One lesson is clear — the financial crisis is a global problem demanding a global response. The leaders of the world’s major Enhancing public developed and emerging economies accountability and global recognised this reality when they acceptance of IFRSs highlighted the need to co-ordinate regulatory initiatives when the Group At our meeting in New Delhi in of 20 (G20) met in Washington, DC, USA, January 2009, the Trustees completed on 15 November 2008 and in London, UK, the first part of their five-yearly review on 2 April 2009. of the IASC Foundation constitution — this review was one of the Trustees’ The Trustees of the International priorities in 2008. The first part of our GERRIT ZALM Accounting Standards Committee Constitution Review addressed the issue CHAIRMAN OF THE IASC (IASC) Foundation and the members of of public accountability by creating a FOUNDATION TRUSTEES the International Accounting Standards link to an independently established Board (IASB) recognise the role a single Monitoring Board of capital market set of accounting standards used authorities. At the same time, the worldwide could play in establishing a international basis of the IASB was more effective regulatory infrastructure strengthened by increasing its size from for the world’s integrated capital 14 to 16 members by July 2012 and markets. International Financial providing geographical guidelines. Reporting Standards (IFRSs), set by the IASB, are now used in more than 100 A strategy review by the Trustees in 2007 countries. Significant advances were highlighted the need to enhance the made toward further adoption of IFRSs in public accountability of the IASC major economies in 2008. By the end of Foundation if the IASB were to become 2008, most of the world’s developed and the world’s accounting standard-setter. emerging economies — including nearly Therefore, the Trustees gave the issue of all of the G20 members — had made public accountability fast-track priority commitments to IFRSs. for the Constitution Review in 2008. The relevance of this priority was confirmed 2 when a group of regulators (the European This basic approach to the architecture Commission, the US Securities and of governance is similar to that in ‘The first part of the Exchange Commission, the Japan place in many national jurisdictions Constitution Review Financial Services Agency and the for accounting standard-setters. Our International Organization of Securities consultation process revealed strong and focused on the creation Commissions) issued in November 2007 consistent support among investors and of a direct link to a press release regarding the IASC others on the need to maintain, within public authorities.’ Foundation’s public accountability. agreed due process, the independence In reaching our conclusions, we of the IASB’s decision-making. At the conducted a consultation process that same time, they understood the need sits as an observer at Monitoring Board included round-table discussions in to establish a formal linkage to public meetings. The Trustees met with the London and a public comment period, authorities, where none was previously Monitoring Board for the first time on where we received responses from more defined, and strongly encouraged our 1 April 2009. than 70 individuals and organisations. efforts to enhance the organisation’s public accountability. The Monitoring Board’s main Our constitutional changes are a responsibilities are to ensure that the significant enhancement of existing Therefore the first part of the Trustees discharge their duties as defined governance arrangements. Underpinning Constitution Review focused on by the IASC Foundation’s Constitution, the organisation’s structure is the the creation of a direct link to an as well as approving the appointment or internationally accepted principle that independent body of public authorities reappointment of Trustees. It is envisaged global accounting standards should be — one that would seek to replicate, on an that the Monitoring Board will meet the developed by an independent IASB. international basis, the link between Trustees at least once a year, or more The IASB reaches conclusions following accounting standard-setters and those often if appropriate. The relationship a transparent and open due process public authorities that have generally and responsibilities of the participating that seeks the views of all stakeholders. overseen accounting standard-setters. organisations are described in the An independent and geographically The initial membership will comprise Memorandum of Understanding (MoU) diverse body of Trustees oversees the the relevant leaders from the European developed by the members of the IASB. Under the constitutional changes, Commission, the US SEC, the Japan FSA Monitoring Board in consultation with the Trustees themselves are now publicly and the IOSCO Emerging Markets and the Trustees. accountable to a Monitoring Board of Technical Committees. The Basel public authorities. Committee on Banking Supervision Annual Report 2008 3 1 REPORT OF THE CHAIRMAN OF THE IASC FOUNDATION TRUSTEES The Monitoring Board arrangements are • one member from South America; and A responsible and not a substitute for existing consultation • two members appointed from any active approach to the requirements. Indeed, the Trustees are area, subject to maintaining overall financial crisis stepping up their efforts for greater geographical balance. dialogue with interested parties through My Trustee colleagues and the IASB have the Standards Advisory Council (SAC), The Trustees have already strengthened responded and will continue to respond which was reconstituted in 2008 and the contingent from Asia-Oceania with in an urgent and responsible manner met for the first time in its new form the recent appointment of Prabhakar to help restore confidence in financial in February 2009. The Trustees and the Kalavacherla of India (formerly a partner markets. The Trustees have supported IASB are also working to build stronger with KPMG). The focus in 2009 is to the IASB’s efforts, under Sir David relationships with representatives of identify qualified candidates who Tweedie’s leadership, to respond users, preparers, auditors, academics, will provide practical experience promptly to the recommendations of the and regulatory organisations. from the perspectives of users, preparers, Financial Stability Forum (FSF) and the and regulators. G20, particularly on off balance sheet Furthermore, consistently with the items and the development of In December 2008 the Trustees