The Committee of European Securities Regulators CESR

Chapter 1 – Financial Reporting Context Page 10 5 The Structure of the IASB The structure of the IASB is designed to demonstrate the attributes that are necessary to establish the legitimacy of a standard-setting organisation, including the independence of its members and the adequacy of technical expertise.

5.1 The IASB

The Preface to International Financial Reporting Standards lists the objectives of the IASB as being:  to develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the various capital markets of the world and other users of the information to make economic decisions;  to promote the use and rigorous application of those standards; and  to work actively with national standard-setters to bring about convergence of national accounting standards and IFRSs to high quality solutions. There are 14 board members on the IASB, with each member having one vote. Twelve of the members are full-time, with the remaining two part-time. Members of the IASB are appointed for a term of up to five years which is renewable once. The foremost qualification for membership is technical expertise, together with relevant experience of international business. The membership selection process ensures that no particular constituency or geographical group dominates IASB decision making. To achieve a balance of perspective and experience on the Board, the Trustees must ensure that IASB members provide an appropriate mix of recent practical experience among auditors, preparers, users and academics.

5.2 The Standards Advisory Council SAC

SAC is a group of organisations and individuals with an interest in international financial reporting. It is a body set up to participate in the standard-setting process. Members are appointed by the International Accounting Standards Committee Foundation which also appoints members to the IASB. These members are drawn from different geographic locations and have a wide variety of backgrounds, including users, preparers, academics, auditors, analysts, regulators and professional accounting bodies. The SAC’s role includes advising on priorities within the IASB’s work programme, and the IASB is required to consult with the SAC in advance of any board decisions on major projects that it wishes to add to its agenda.

5.3 The International Financial Reporting Interpretations Committee IFRIC

IFRIC is the successor to the former Standing Interpretations Committee SIC and is responsible for interpreting the application of international standards. IFRIC prepares interpretations of how specific issues should be accounted for under the application of IFRS where the standards do not include specific authoritative guidance and there is a risk of divergent and unacceptable accounting practices. Interpretations are then approved for publication by the IASB. All the SIC Interpretations issued under the supervision of the IASC have been adopted by the IASB. Chapter 1 – Financial Reporting Context Page 11 IFRIC consists of 12 members who are required to operate on the basis of their own independent views and not as representatives of the organisations with which they are associated. 6 The IASB’s “Stable Platform”