- Weak relationships with national standard setters
- Lack of convergence of IASs and major national GAAP after 25 years of trying
- Part-time board with a full-time workload
- Need for broader sponsorship than the accounting profession
- Lack of widespread recognition of its standards by regulators
- Shortage of resources
16.7 RESTRUCTURING OF IASC INTO IASB. Recognizing these problems, in 1998
the committee that was entrusted with oversight of the IASC undertook a compre-
hensive review of the IASC’s structure and operations. That review was completed
in 2000. The principal recommendations of the structure review were that:
- The large, part-time IASC should be replaced by a smaller and essentially full-
time International Accounting Standards Board (IASB or “the Board”). - The new IASB should operate under a broad-based IASC Foundation (IASCF)
whose trustees represented all regions of the world and all groups interested in
financial accounting. - The new IASB should have a Standards Advisory Council (SAC) to provide
counsel to the board. - The SIC should continue in a slightly modified form under the name of Interna-
tional Financial Reporting Interpretations Committee (IFRIC).
(a) Approval of the Proposed Restructuring. After some tweaking, the proposals re-
ceived rapid and widespread support. In November 1999, the IASC board itself ap-
proved the constitutional changes necessary for its own restructuring. In May 2000,
the Council of the International Federation of Accountants (IFAC) unanimously ap-
proved the restructuring. The constitution of the old IASC was revised to reflect the
new structure. A new IASC Foundation was incorporated (under the laws of the U.S.
state of Delaware), and its trustees were appointed. By early 2001, the members of
the IASB and the SAC were appointed, and the new structure became operational.
Later that year, the IASB moved into new quarters in London.
The IASB’s budget of US$15 million per year is nearly five times that of the old
IASC. The board meets monthly, except for August, usually for four days. Three or four
times a year the board meets with the chairpersons of certain major national standard
setters, with a goal of mutual information and identification of steps toward conver-
gence of accounting standards. Seven of the members of the IASB have specific liaison
responsibilities with these national standard setters. The liaison countries are Australia,
Canada, France, Germany, Japan, New Zealand, the United Kingdom, and the United
States. The board also meets three times a year with its Standards Advisory Council.
Exhibit 16.4 is a diagram of the new IASB structure.
(b) Key Responsibilities of the IASB. The IASB has 14 members, 12 of whom serve
full-time and two part-time. The board’s principal responsibilities are to:
- Develop and issue International Financial Reporting Standards and Exposure
Drafts - Approve Interpretations developed by the IFRIC.
16 • 10 INTERNATIONAL FINANCIAL REPORTING STANDARDS