Financing
The responsibility for the financing arrangements of the IFRS Foundation rests with its Trustees. They approve annually the budget of the IFRS Foundation and determine the basis for funding.
Any financing regime has to ensure that the IFRS Foundation and the IASB have the ability to engage interested parties throughout the world in the shaping of financial reporting standards, while maintaining the capability to respond to crises. At the same time, the financing should be accomplished in such a way that ensures the independence and objectivity of the standard-setting process.
As a private sector organisation the IFRS Foundation has no authority to impose funding regimes on countries. However, in the pursuit of their objective the Trustees have worked closely with regulatory and other public authorities and key stakeholder groups to create national funding regimes. As a result, levy systems and national contributions through regulatory and standard-setting authorities or stock exchanges have already been introduced in a number of countries.
The Trustees funding efforts are guided by four principles, agreed in 2006:
Broad-based
A sustainable long-term financing system must expand the base of support to include major participants in the world’s capital markets, including official institutions, in order to ensure diversity of sources.
Compelling
A system must carry with it enough pressure to make free riding very difficult. This may be accomplished through various means, including official support from the relevant regulatory authorities and formal approval by the collecting organisations.
Open-ended
The financial commitments should be open-ended and not contingent on any particular action that would infringe on the independence of the IFRS Foundation and the IASB. This should include sustained support from official international organisations, central banks and the major accounting firms.
Country or jurisdiction-specific
The funding burden should be shared by the major economies of the world on a proportionate basis, using GDP as the determining measure. Each country or jurisdiction should meet its designated target in a manner consistent with the principles above. Trustees should be assigned to specific countries to assist in the development of the funding scheme.