by Richard Martin, head of corporate reporting, ACCA
Late 2012 IASB issued for comment what might have seemed an innocent suggestion that it set up a new consultative forum bringing together national standard setters (NSS). The aim is clear – for IASB to co-operate more closely with them to develop and get support for the new IFRS that it will seek to put out.
The joint working arrangements and common agenda with the US FASB are winding down because of a lack of forward impetus in US adoption of IFRS and because the joint standards will be finalised in 2013 (perhaps) either as common standards or as separate slightly different standards. Some new arrangement is needed for a continuing IASB-FASB dialogue. Equally IASB has bilateral relations and meetings with the Japanese and EFRAG for Europe. It all seems better to merge these together, simplify the IASB Chairman’s travel schedule and ensure other voices than the US are in the conversation. Hence IASB have suggested this Accounting Standards Advisory Forum (ASAF).
However the problem comes in deciding how many countries can be at the ASAF table and who they should be. IASB have got as far as suggesting there should be 12 seats only, without yet saying who will be selected. The 12 are to be split as three for North America, three for Europe, thre for Asia – Pacific, one each for Africa and South America and two spare. This has created in Europe anyway a huge fight over who will be at the table. There is EFRAG who of course has always wanted to be seen as ‘the European voice’ on accounting standards, but there also more than three large countries. It would seem to be the same issue in Asia with at least three large countries – China, India and Japan – not leaving enough seats for anyone else. Add to this the problems of parcelling up the world like this – Russia and Turkey are both in Europe and in Asia for instance, and where do the Caribbean countries fit? The risk for the IASB is that this will not just lead to regional squabbling, but IASB is going to have make the decisions and there seem likely as a consequence to be more disappointed NSS disenchanted with IASB, than happy ones.
So what is important is not to put too much emphasis on ASAF, but keep IASB focussed on its due process wide range consultations. There is of course also the possibility that ASAF will turn out to be a bit of a talking shop and not as critical as every standard setter seems to think it will be.