Our Ref: PSC/TS/ED20/2015
Friday, 27 November 2015
Michel Prada
Chairman
IFRS Foundation
30 Cannon Street
London
EC4M 6XH
United Kingdom
Dear Mr. Prada,
RE: Request for Views Trustees’ Review of Structure and Effectiveness: Issues for the Review
The Institute of Certified Public Accountants of Kenya (ICPAK) welcomes the opportunity to share our
suggestions and observations on the structure and effectiveness of the Foundation as contained in the
Request for Views Trustees’ Review of Structure and Effectiveness: Issues for the Review (RfV) of July
2015.
We believe the IFRS Foundation/IASB should extend the scope of its standard-setting activities by
developing standards for the public sector or the not-for-profit sector. However there is need to
undertake a proper feasibility assessment of the same to ensure that the cost does not outweigh the
benefits and also lead to duplicity of standard setting initiatives, since such activities would require
substantial additional resources as well as different knowledge, expertise and capacity. The Institute is
also of the view that although IASB’s primary focus should remain financial reporting, it is important
that the IASB is fully aware of the developments across the whole range of corporate reporting and
can take steps, if and when appropriate, to maintain the relevance of IFRS within the corporate
reporting debate.
We support the Trustees views on Education Initiative whose objective is to reinforce the
organisation’s goal of promoting the adoption and consistent application of IFRS. We also note that
the initiative is also viewed as a revenue generating stream and would like to know to what extent
education material are of help in implementation efforts, in particular when they are not publicly
available. ICPAK believes that IFRS Foundation education material should be available to ease
implementation of standards in practice.
We are also of the view that representation of Asia and Africa needs to be reconsidered since these
regions have the largest number of nations adopting IFRSs.
Our Ref: PSC/TS/ED20/2015
If the Trustees decide to proceed with the proposals, our comments and detailed responses to the
questions set out in the request for views are detailed hereafter.
If you would like to discuss these comments further, please contact the undersigned via mail to
icpak@icpak.com or nixon.omindi@icpak.com.
Yours sincerely,
Nixon Omindi
For Professional Standards Committee
ICPAK Submissions on the Request for Views Trustees’ Review of Structure and Effectiveness: Issues for
the Review
Q1. Considering the consequences referred to above, what are your views on whether the IASB should
extend its remit beyond the current focus of the organization to develop Standards; in particular for
entities in the private, not-for-profit sector?
There exists a gap in the private not for profit sector in financial reporting. Considering the different
requirements imposed by donors and fund providers, and the demands for internationally consistent
standards for the public sector and not-for-profit sectors, there is need to have standards developed on
financial reporting.
However, a feasibility study should be undertaken to evaluate the cost benefit analysis of internationally
consistent standards for the public sector and not-for-profit sectors. This will then guide the Foundation
on the next steps.
Q2. Do you agree with the proposal that the IASB should play an active role in developments in wider
corporate reporting through the co-operation outlined above?
We agree that the IASB should play an active role in developments in wider corporate reporting through
the co-operation.
Q3. Do you agree with the Foundation’s strategy with regard to the IFRS Taxonomy?
We agree.
Q4. How can the IASB best support regulators in their efforts to improve digital access to general
purpose financial reports to investors and other users?
The IASB can best support regulators in their efforts to improve digital access to general purpose
financial reports to investors and other users by:
1. Assisting the jurisdictions that have adopted IFRS to effectively implement the standards
2. Provide continuous education on IFRS to jurisdictions that have adopted IFRS for consistent
application of IFRS internationally and make education material developed through the
education initiative more accessible.
3. Continuous feedback on post implementation for support
This will enable the users to easily improve digital access to general purpose financial reports to investors
and other users
Q5. Do you have any views or comments on whether there are any other steps the IASB should take
to ensure that it factors into its thinking changes in technology in ways in which it can maintain the
relevance of IFRS?
It is important to consider how technology might affect how financial information is shared and accessed
generally. The fast pace in technology is impacting on how information is communicated. We there
recommend that:
1. Research is done to determine the effect of technology on financial information and its use
2. Establishing a pool of experts to help and assist in the monitoring and responding to changes in
technology that impact of financial information access and use.
i
ICPAK Submissions on the Request for Views Trustees’ Review of Structure and Effectiveness: Issues for
the Review
Q6. What are your views on what the Foundation is doing to encourage the consistent application of
IFRS? Considering resourcing and other limitations, do you think that there is anything more that the
Foundation could and should be doing in this area?
In our view what the Foundation is doing to encourage the consistent application of IFRS, is appropriate
and should be upheld.
Q7. Do you have any suggestions as to how the functioning of the three-tier structure of the
governance of the Foundation might be improved?
The three-tier structure remains appropriate for the governance of the Foundation; however there is
need for diversity of the emerging market to include Africa, especially in the Monitoring Board.
Q8. What are your views on the overall geographical distribution of Trustees and how it might be
determined? Do you agree with the proposal to increase the number of ‘at large’ Trustee
appointments from two to five?
The geographical distribution has a skew to emerging markets that is Africa and South America. The
continents are upcoming markets and the IFRS adoption and implementation is fast growing. In light of
the strategic objective 2 for global adoption of IFRS there is need increase the membership the two
regions and also create a balance in the level of adoption and implementation of the regions to allow for
greater support of the regions' IFRS adoptions.
We do not support the increase of the number of "at large" from two to five. The criteria for maintaining
geographical balance is not well defined. There should be a clear and well defined process of establishing
when to have the regional balance. There is no guide on how the geographical distribution will be once
the number is increased from two to five and how the rationalization will be done.
Q9. What are your views on the current specification regarding the provision of an appropriate
balance of professional backgrounds? Do you believe that any change is necessary and, if so, what
would you suggest and why?
The current appropriate specification regarding the provision of an appropriate balance of professional
backgrounds is appropriate. The balance of professional backgrounds should be reflective of the scope of
the Foundations activities going forward. However there is need for caution in light of the challenge of
getting the right and suitable applicants.
We do not believe there are any changes necessary for now.
Q10. Do you agree with the proposal to change the focus and frequency of reviews of strategy and
effectiveness, as set out above?
I agree, there is a need for the organization to have some stability and continuity, in particular in terms
of its structure to at least every five years.
ii
ICPAK Submissions on the Request for Views Trustees’ Review of Structure and Effectiveness: Issues for
the Review
Q11. Do you agree with the proposals to reduce the size of the IASB as set out in the Constitution
from 16 members to 13 and the revised geographical distribution?
We agree, this will make it more effective and improve decision making ability.
Q12. Do you agree with the proposal to delete Section 27 and to amend the wording of Section 25 of
the Constitution on the balance of backgrounds on the IASB?
We do not agree. There is no inconsistency established, and section 25 is complimented by section 27.
The addition is the regulators is welcomed and can be inserted to cater for their diverse needs.
Q13. Do you agree with the proposal to amend Section 31 of the Constitution on the terms of
reappointment of IASB members as outlined above?
We agree, as this will provide a pool for use of theirskills and expertise as required by the Foundation
Q14. Do you have any comments on the Foundation’s funding model as outlined above? Do you have
any suggestions as to how the functioning of the funding model might be strengthened, taking into
consideration the limitations on funding?
None
Q15. Should the Trustees consider any other issues as part of this review of the structure and
effectiveness of the Foundation? If so, what?
We have none for now.
iii