The European Parliament has called for the international standard setter to
improve its governance, saying it lacks in transparency and accountability as it
is not under the control of any democratically elected parliament or government.
Parliament adopted a
yesterday, drawn up by MEP Alexander Radwan, which detailed the deficiencies
International Accounting Standards Board.
According to the report, the IASB’s oversight body, the International
Accounting Standards Committee Foundation, has indicated that it will make
efforts to redress the lack in accountability, but Radwan insisted more needs to
MEPs believe that since the EU is the largest jurisdiction which has adopted
the IFRS, there should be more representatives of a European background in the
standard setting bodies, and that all trustees of the IASB should come from
nations that have signed up to the IFRS, or intend to do so.
Parliament wants to see a public oversight body set up involving all
IASCF/IASB public stakeholders, including legislators and supervisors, and a
body representing market participants, which would deliver an annual report on
the functioning of the IASCF/IASB. Such a body could also be responsible for
selecting and appointing trustees in a transparent manner with a geographically
balanced representation of all stakeholders.
The report also urges IASB to carry out impact studies among all interested
parties before adopting new accounting standards and want parliament to be
seriously consulted on the IASB work programme.
The report also criticised the IASB’s proposed version of the
IFRS for small and medium sized enterprises (SMEs) for
being far to complicated.
The report also called for the “fair value” principle to be limited in scope,
noting that it can be costly and lead to unrealistic valuations in some
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