Revised Charter and Memorandum of Understanding Published by the Monitoring Board
The Monitoring Board, which is responsible for oversight of the IFRS Foundation, has published its revised Charter. It has also published the Memorandum of Understanding (MoU) that defines its relationship with the IFRS Foundation. The most important changes to the Charter included changes to membership criteria, description of assessment processes, and the results of periodic review of existing members. These changes were included as Appendix A and Appendix B.
In February 2012, the Monitoring Board issued a report that identified a number of amendments to the governance framework. These included expansion of Monitoring Board's membership and starting periodic assessment of the members against membership criteria. The assessment process and the criteria were developed by the Monitoring Board in February 2013 and announced in March 2013.
The criteria have now been formally added to the Charter. The key points of the criteria include:
- The jurisdiction should have made clear commitment to IFRSs and it allows or mandates the application of IFRSs to consolidated financial statements
- The jurisdiction is a major market for raising capital
- The jurisdiction financially contributes to the development of IFRSs
- The jurisdiction has a robust enforcement mechanism in operation
- Local standard-setting bodies of the jurisdiction contribute to development of IFRSs
The amendments in the MoU primarily focus on the selection of Chairman of IASB. An additional duty to "Provide input on the IASB chair selection" has been added to the responsibilities of the Monitoring Board. Following is the description of how the Monitoring Board will fulfill this duty:
- Ultimate responsibility of selecting the Chair of IASB rest with the IFRSF Trustees
- The Monitoring Board and the IFRSF Trustees will agree upon a criteria for selection of a candidate- The Monitoring Board will provide a short list of potential candidates who have been assessed against the criteria