NATIONAL STANDARD SETTERS could be left feeling like losers in a game of musical chairs if they fail to get a seat on the IASB’s planned advisory forum.
For, like at the popular kids’ party game, when the music stops, they will be left with the realisation that there are too many bums and not enough seats.
The IASB has proposed a new 12-member advisory board – known as the Accounting Standards Advisory Forum – that will make accounting standard-setting a more collective process.
The plan is in essence very sensible. It formalises pre-existing arrangements between the IASB and regional bodies and standard setters. It will give those that are already IFRS-compliant a greater say in the development of global accounting rules and should provide those yet to join the club with technical support.
It will also replace the bilateral arrangements that have taken up so much of the IASB’s time. The IASB’s unique arrangement with FASB as it tried to lead the US standard setter to the water of accounting convergence was criticised by some as giving a non-IFRS country too much influence. The EU in particular felt it wasn’t enjoying the same level of input.
The new order of things will undoubtedly provide greater influence to a greater number of participants. However, there will still be gripes that not enough influence has been doled out.
The EU, for example, could argue that having only three seats on the board does not represent its position in the hierarchy of IFRS adopters. Some question whether regional bodies should be at the table, and question how much space should be given to countries not yet on board.
Established standard setters in the EU – France, Germany, Italy and the UK – will be left to squabble over potentially the only seat left available to them, should EFRAG join and one seat go to a non-EU country.
It will be interesting to see whether those that don’t get immediate membership will feel left out in the cold. For instance, the FRC has said that it aims to bring more influence to bear on international developments. Missing out on a seat at the table could dent its ambitions.
The OECD's secretary-general José Ángel Gurría has given his verdict on what Brexit means for the UK and the EU
The Office of Tax Simplification is seeking three senior policy advisers
The FRC says it best when it says nothing at all
John Hitchins was a partner with PwC for 26 years until he retired in 2014