The Trustees of the IFRS Foundation have completed their most recent review of the Foundation’s structure and effectiveness

They proposed a range of enhancements, impressively positioned as ensuring that “the organization remains fit for a changing world.” Here’s how the press release summed up the process and some of what came out of it:

• “The latest review is the fifth to be conducted by the Trustees, and as such focussed on evaluating and refining the current structure and activities of the organisation (including those established as a result of previous reviews), as well as considering the future role of the organization.
• To reach the conclusions outlined in the review, the Trustees conducted an extensive consultation process, with stakeholders encouraged to submit feedback and proposals. The review will see the Trustees oversee the implementation of the following actions:
• To further enhance governance and funding arrangements of the IFRS Foundation:
• enhanced transparency: the Trustees received broad support for the existing three-tier governance structure, but will take steps to enhance visibility of Trustee oversight of the Board, including making meetings of the Due Process Oversight Committee public;
• geographical balance: change the geographical distribution of both the Trustees and the Board by combining the North American and South American allocations into a single ‘Americas’ category, to allow for even distribution and better representation across the entire region;
• size of the Board: reduce the size of the Board from 16 to 13 members, with the flexibility to appoint a 14th (at-large) member if appropriate; and
• funding: the Trustees received broad support to maintain the current ‘three-pillar’ funding model until the funding regime based on publicly supported financing is fully achieved.”

I must admit I see much of this as theatre rather than substance, analogous to tweaking the grandiose rituals of airport security. The difference for example between sixteen and thirteen board members is mere pseudo-science, especially when you add in the portentous fine-tuning of the possible fourteenth person. The premise would need to be, I suppose, that this fourteenth member might sometimes (through enhanced board chemistry? through sheer genius?) add some vital value to (say) the development of a new standard, of a kind that would otherwise have gone undetected (or at least underappreciated) through all the years of work by the staff, all the comment letters and other outreach and so forth. But it’s virtually impossible to see how that could happen, given that if standards aren’t based in demonstrated benefit, in broad consensus and empirical support, then they’re dead in the water anyway. If not for imposed notions of “balance” and diversity, it’s hard to see why the optimum outcome-oriented board wouldn’t be much smaller: PWC for instance suggested in its comment letter that the benefits of effectiveness might justify an IASB of just nine members.

Anyway, that and the other matters summarized above are mainly of interest to insiders and obsessives. The following passages are likely more relevant to the rest of us:

• “To strengthen the relevance of IFRS Standards
• technology and financial reporting: accelerate work to address barriers to high-quality digital reporting by collaborating with investors, securities regulators and others to ensure the IFRS Taxonomy remains fit for purpose. At the same time, the Foundation will establish a network of experts to provide advice on technological innovation and its impact and relevance to IFRS Standards; and
• remit: retain the existing focus of the Board on for-profit entities, with no expansion at this time to cover either the public sector or the private not-for-profit sector. While the focus of the Board will remain on financial reporting, further work will be done to consider the Board’s future role and work plan within the context of developments in wider corporate reporting.
• To support consistent application of IFRS Standards
• resources: while the Board’s focus remains on producing high-quality Standards based on clear principles, there will be an increased emphasis on activities to support the consistent application of IFRS Standards. This includes the realignment of education, implementation support and interpretation activities into a single team;
• programmes: continue to develop additional resources and materials to assist the consistent implementation of major new Standards, including the provision of online resources; and
• enhanced cooperation: continue to develop relationships with securities regulators (for example IOSCO, through the recently updated joint Statement of Protocols) and others to support implementation of IFRS Standards around the world.”

This all seems to make broad sense. Regarding technology: as I’ve written before, much of the IASB’s thinking often seems out of sync with the spirit of the age, which emphasizes abundance of and flexible access to information. The continuing assumption of a highly structured, largely inflexible, linear approach to delivering financial information seems particularly anomalous, and therefore a high-priority area for reassessing. The more detailed “feedback statement” accompanying the news release suggests we shouldn’t get over-excited about the prospects of a quick breakthrough in this area though. For instance:

• “The Trustees agree that the Foundation and the Board should formalize how they track technological developments, including establishing a network of experts to provide advice on technological issues and their potential impact on the Standards. This network of experts will comprise individuals from a variety of backgrounds, and the Foundation will work with them using a variety of different mechanisms (for example, roundtables and individual meetings). The Trustees note that the IFRS Advisory Council will also be focusing on this area in order to help the Foundation monitor developments.”

The average reader will probably glean from this that for the near future at least, we should expect more talk than action…

The opinions expressed are solely those of the author