Empower Users of Financial Information as the IASC Foundation's Stakeholders. Testimony to the IASC Foundations's Constitutional Review Round Table in London, 19 June 2008. Bruegel Policy Contribution, July 11, 2008

Abstract

Nicolas Véron comments on the proposal for governance reform ('constitution review') published in May 2008 by the IASC Foundation, the private-sector body which oversees the setting of International Financial Reporting Standards (IFRS). He emphasizes the unprecedented nature of this global governance experiment and advocates more direct representation of investors as the primary stakeholders of international accounting standard-setting, as well a more thorough consultation process. EXECUTIVE SUMMARY. The creation of a new body with authority over Trustee appointments and reappointments is a crucial step for the IASC Foundation. This body is likely to be granted more authority in the future over other key governance functions, including the Foundation’s funding. In this respect, the proposed Monitoring Group contains significant flaws, the primary one being its inability to credibly represent at global level the investors and other capitalmarket users which should be considered the Foundation’s key stakeholders. Moreover, the very short timetable proposed for the first part of the Foundation’s Constitution Review is not warranted by the circumstances. The Foundation's Trustees should take a step back and consider a revised concept of oversight body as part of a onephase Constitution Review to be completed in 2009