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IFRS Foundation

Nonprofit accounting organisation From Wikipedia, the free encyclopedia

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The International Financial Reporting Standards Foundation or IFRS Foundation (sometimes IFRSF) is a nonprofit organization[a] that sets corporate reporting standards for the capital markets globally founded on the belief that better information from companies leads to better investment decisions. Its main objectives include the development and promotion in the public interest a single set of high quality, understandable, enforceable and globally accepted International Financial Reporting Standards (IFRS Standards), through the International Accounting Standards Board (IASB) for accounting standards and the International Sustainability Standards Board (ISSB) for sustainability-related disclosure standards.[2]

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History

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Main article: International Accounting Standards Committee

In 2001, the International Accounting Standards Committee (IASC, established 1973) reformed itself under a new dual structure consisting mainly of an independent standard-setting body, the International Accounting Standards Board, and a foundation that appoints and funds the IASB, initially named the IASC Foundation.[3][4] The IASB assumed accounting standard-setting responsibilities from the IASC on 1 March 2001. The IASC Foundation changed its name to IFRS Foundation on 1 July 2010.[2]

During the first twenty years of activity, the IASB was the organization's dominant standard-setting body.[5] In 2021, the foundation created a second standard-setting board, the International Sustainability Standards Board.[6][7][8][9]

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Governance structure

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The IFRS Foundation has a three-tier governance structure, consisting of a Monitoring Board, trustees, and international standards setting boards.[10] The organization develops standards intended to promote transparency, accountability and efficiency to capital markets around the world in the interest of fostering trust, growth and long-term financial stability in the global economy.[2][11][1]

Monitoring Board

The Monitoring Board was established by the IFRS Foundation Trustees in New Delhi, India, in January 2009.[12] The foundation is governed by a group of 22 trustees,[b][13] themselves under the oversight of the Monitoring Board.[c] Its aim is 'providing a formal link between the trustees and public authorities' in order to enhance the public accountability of the foundation.[d][14][15]

The Monitoring Boards members, a group of capital markets authorities, are responsible for setting the form and content of financial reporting in their jurisdictions. Their responsibility is to protect and advance the public interest through the development of international accounting and sustainability disclosure standards. It consists of the following entities:[16][17]

The Basel Committee on Banking Supervision serves as observers of the Monitoring Board.

The Monitoring Board's duties include participating in and approving trustee nominations, advising on Chair selections, reviewing financing and budgets, and overseeing the trustees' review of the standard-setting processes.[17]

Trustees

The governance of the IFRS Foundation is primarily managed by the trustees, who may appoint other governing organs and are formally linked to public authorities via the Monitoring Board, with minor constitutional variations allowed by a 75% trustee majority.[18] The trustees' responsibilities[19] include governance, strategy and funding; due process oversight; and IASB, ISSB, IFRS Interpretations Committee and advisory body[e][20][21] appointments to ensure the independence of the Board Members when adopting the standards.[22] Trustees must offer balanced professional backgrounds (regulators, investors, auditors, preparers, users, academics, public officials) and share a global interest in transparent corporate reporting.[23] The foundation is obligated to conduct a comprehensive review of its strategy, effectiveness, and governance structure—including the geographical distribution of the trustees—at least every five years, with all proposals published for public comment.[23]

As of 2024, the trustees[f][13] include:

  • Erkki Liikanen (chair), previously a governor of the International Monetary Fund and a member of the Governing Council of the European Central Bank[24]
  • Teresa Ko (vice-chair), Freshfields Bruckhaus Deringer's China chairman and founding partner[25]
  • Maria Theofilaktidis (vice-chair), executive vice president and chief auditor at Scotiabank[26]

IFRS Foundation Trustee chairs, past and present:

Independent standard-setting boards

The IFRS Foundation, via financial and sustainability standards defined by the IASB and ISSB, promote their rigorous worldwide application, address diverse entity needs, and facilitate convergence with national standards.[18] IFRS standards primarily serve the needs of investors and capital market participants, but the ISSB ensures its sustainability disclosure standards are interoperable with other reporting initiatives to address the broader information needs of various stakeholders.[18]

Accounting

The IASB is an independent group of experts with an appropriate mix of recent practical experience and broad geographical diversity, as required by the foundation's constitution.[18]

IASB members are responsible for the development and publication of accounting standards, including the IFRS for SMEs Accounting Standard.[28][29][30] The IASB works with the IFRS Interpretations Committee to support consistent application of the standards.[31]

The accounting standards are required for use by more than 140 jurisdictions.[32] The IASB’s work includes continually developing and improving the standards.[2]

Sustainability

Responding to the need for consistent and comparable sustainability information to inform economic and investment decisions, in 2021 the IFRS Foundation created the ISSB,[33] which operates alongside the IASB. The ISSB develops Sustainability Disclosure Standards, designed to deliver a truly global baseline of sustainability disclosures to inform capital markets.[2][g]

The ISSB builds on the work of market-led investor-focused reporting initiatives, including the Climate Disclosure Standards Board (CDSB), the Task Force on Climate-related Financial Disclosures (TCFD), the Value Reporting Foundation’s Integrated Reporting Framework and industry-based SASB Standards.[7]

The ISSB issued its inaugural Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, in 2023. Jurisdictions around the world are determining how to adopt or use the Standards.[34][35][36]

Digital taxonomies

The IFRS digital taxonomies facilitate the reporting of information prepared in accordance with IFRS standards in a computer-readable, structured data format.[34][37] They consist of elements that can be used to tag information in financial reports prepared using the standards. Tagging makes information computer-readable and, therefore, more accessible to investors and other users of electronic company financial reports. The eXtensible Business Reporting Language (XBRL) is used to represent and deliver IFRS Taxonomy[38] content. The digital taxonomies include the IFRS Accounting Taxonomy, the IFRS Sustainability Disclosure Taxonomy and the SASB Standards Taxonomy.

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Organisation

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The Columbus Building at 7 Westferry Circus in Canary Wharf has been home to the IFRS Foundation since August 2018.[39]
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The building at 30 Cannon Street was the previous head office of the IFRS Foundation and IASB, from 2001 to 2018.

The IFRS Foundation receives contributed revenue made up of voluntary contributions from jurisdictions, ISSB seed funding, philanthropic grants and contributions from companies (61%).[h] It receives earned revenue from intellectual property licensing, publications, subscriptions, membership fees, education programmes and conferences (39%).[40] It maintains a multi-location model with offices in London (main base for IASB and central staff), Montreal (ISSB hub for the Americas), Frankfurt (ISSB seat and hub for EMEA), Beijing (ISSB hub for emerging economies and Asia engagement), San Francisco (ISSB technical support), and Tokyo (support for both IASB and ISSB in Asia-Oceania), to support its global mission.[41]

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As of 2024, its managing director is Michel Madelain.[42] He leads the foundation’s strategic planning, governance, funding and expenditure activities and day-to-day operations. He also supports the work of the trustees and both boards.

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See also

Notes

  1. [a]
    The IFRS Foundation under the General Corporation Law of the State of Delaware, USA operates in England and Wales as an overseas company (Company number: FC023235) with its principal office at Columbus Building, London.
  2. [b]
    Standard trustees serve a three-year term, renewable once (six-year maximum). A chair appointed from among the trustees serves a three-year term, renewable twice (nine-year maximum in that role).
  3. [c]
    The principal responsibilities of the IFRSF Monitoring Board are to oversee the trustees' discharge of duties, approve the appointment of trustees, review the funding and budget arrangements, and review the standard-setting due process of both the IASB and ISSB, while also providing input on chair selection and addressing matters of broad public interest. The IFRSF Monitoring Board confers with the trustees and the IASB/ISSB on six main areas: IASB/ISSB oversight, due process, agenda setting, resource adequacy, investor protection, and funding, while also having the power to refer new accounting issues to the IASB for timely consideration.
  4. [d]
    The trustees and the IFRSF Monitoring Board maintain communication through annual written reports, regular formal meetings, and ad hoc discussions concerning the work, standards, and regulatory environment of the IFRS Foundation, IASB, and ISSB.
  5. [e]
    The IFRS Advisory Council (Advisory Council shall comprise 30 or more members and provides broad strategic advice to the trustees, the IASB and the ISSB and meets at least twice a year) and Accounting Standards Advisory Forum (ASAF bringing together global National Standard-setters to streamline technical input and ensure the development of globally accepted, high-quality accounting standards in the public interest and meets four times a year).
  6. [f]
    Six trustees appointed from the Asia-Oceania region; six appointed from Europe, six appointed from the Americas, one appointed from Africa and three appointed from any area, subject to maintaining overall geographical balance
  7. [g]
    To achieve its objective of meeting the information needs of global capital markets, the IFRS Foundation engages with a wide range of stakeholders—including Investors, Policy Makers/Regulators, Accounting Professionals/Auditors, Academia, Companies, Media, Multilateral Institutions, Civil Society, Funding Providers, Standard-setters, and Customers—by tailoring its response (such as forums, regular meetings, educational materials, and consultations) to their specific information and contribution needs.
  8. [h]
    The majority of the IFRS Foundation's funding for the year ended 31 December 2024 comes from a diverse international base of contributing jurisdictions and organisations, with Canada (£7,982,213), Germany (£5,657,719), and Japan (£3,447,857) being the largest country-based funders.
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References

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