30 November 2015
Ms. Yael Almog
Executive Director
IFRS Foundation
30 Cannon StreetLondon EC4M 6XH
United Kingdom
Re: Comment on Request for Views“Trustees’ Review of Structure and Effectiveness: Issues for the Review”
The Corporate Accounting Committee (CAC) of the Securities Analysts Associationof Japan (SAAJ) is pleased to comment on Request for Views “Trustees’ Review ofStructure and Effectiveness: Issues for the Review” (hereinafter referred to as the RV) put
out by the International Accounting Standards Board (IASB). The SAAJ is a not-forprofit organization providing investment education and examination programs forsecurities analysts. Its certified members number 26,000. The CAC is a standing
committee of the SAAJ composed of 15 members, most of whom are users including
equity and credit analysts, and portfolio managers, while a few others are academicians
and public accountants. The CAC writes comment letters to global standard setters,
including the IASB and the Accounting Standards Board of Japan (ASBJ), and exchanges
opinions with organizations including the ASBJ and Financial Services Agency.
The CAC’s views on specific questions are explained below.
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 organisation todevelop Standards; in particular for entities in the private, not-for-profit sector?

We recommend the IASB to remain prudent when it consider if its remit should beexpanded.
We believe the IASB should not change its primary focus on thedevelopment of accounting standards for public companies, given the situation that many
important specific IFRSs are still either under development or in the research phase.
Meanwhile, we expect the private not-for-profit sector will continue to be increasingly
important in the economic activities. Accordingly we recommend the IASB to continue
paying attention to the trends in the private not-for-profit sector with due care, in order tobe well prepared to develop international standards for them when it becomes inevitable―1―

in the future.
Q2 Do you agree with the proposal that the IASB should play an active role indevelopments in wider corporate reporting through the co-operation outlinedabove?
We, as financial reporting users such as securities analysts and investors, welcome thewider corporate reporting such as integrated reporting to enrich the information provided
to us, making our corporate analysis more efficient. We think that the IASB should help
improving wider corporate reporting with its expertise acquired over a long period of time.
However, we fully agree with the view “The Trustees continue to view the organization’s
existing forms of co-operation as a more appropriate approach than the IASB broadening
the scope of its work into areas outside the traditional boundaries of financial reporting”
in the paragraph 28 of the RV, because many important specific IFRSs are still underdevelopment. We expect the IASB will continue to get involved with this area as oneof key actors, but not as a main actor, in such projects as corporate reporting dialogue(CRD).
Q3 Do you agree with the Foundation’s strategy with regard to the IFRS Taxonomy?
We agree with the Foundation’s strategy on the IFRS Taxonomy. Information
vendors that use XBRL to provide users with the financial information are not necessarily
familiar with accounting standards per se. Accordingly, we are concerned that, the risks
have got ever higher for massive amount of misleading accounting information due tovendors’ misunderstanding to be disseminated instantly to enormous number of investors
and used by them. We agree with the IFRS Foundation’s IFRS Taxonomy strategy
because the active involvement and monitoring by the accounting standard-setter isessential to achieve the accurate digital representation of IFRS.
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 thinkthat there is anything more that the Foundation could and should be doing in thisarea?
Specific standards of IFRSs are getting increasingly elaborated to reflect theincreasingly complex commercial and financial transactions in the real world. We
believe it would be a significant challenge for the IASB and the Foundation to achieve―2―the consistent application of IFRSs if they engage only in standard-setting. We
regrettably feel that the IASB’s education functions and activities are insufficient toappeal users of financial statements, and expect the IASB will address this situation moreproactively by providing guidelines, education activities and post-implementation
reviews in order to meet various stakeholders' needs.
We recommend the IASB and the Foundation to collect and analyze information on theaccounting treatment on the specific business practice by jurisdiction or by industry.
Considering resourcing and other limitation, it would be more sensible for the IASB andthe Foundation to seek the collaboration with the national accounting standard setters oracademia. We believe it is the first step for the consistent application to know the realityof diversity in practice. Given the global trend of expansion in the IFRS adoptingjurisdictions, we believe the IASB should provide guidelines or education materials
proactively where the significant diversity in application of IFRSs is identified by theresearch mentioned above.
Q10 Do you agree with the proposal to change the focus and frequency of reviews ofstrategy and effectiveness, as set out above?
We agree with the proposal to change the frequency of reviews of strategy andeffectiveness to five-year cycle considering the IFRS Foundation’s resourcing and otherlimitations. We would note, however, there are minority opinions that five-year cyclewould be too long considering rapidly changing of economic and business environment.
We believe it would be more efficient for the IFRS Foundation to coordinate thefrequency and timing of its reviews of strategy and effectiveness and the IASB agenda
consultations. In this respect, we propose that the IFRS Foundation and the IASB toconsider establishing an effective mechanism to monitor the progress in, as well as toidentify the impediments to the implementation of its strategies and the work plan of theIASB to reflect the recommendations from the strategy reviews and the agenda
consultations.
Q11 Do you agree with the proposals to reduce the size of the IASB as set out in theConstitution from 16 members to 13 and the revised geographical distribution?
We disagree with the proposal. In general, we agree that the discussion among fewer
members tends to be more lively and focused than the one among larger number ofmembers. Having said that, there seems no significant difference in the liveliness of thediscussions between the ones by 16 members and by 13 members. We cannot find any―3―

clear reason to have to reduce the size of the IASB from 16 members to 13 from the six
factors in paragraph 90 of the RV. We find that current 14 members of the IASB havebeen working very well without any major problem since July 2014. Accordingly, we
propose to amend the constitution to reduce the size of the IASB from 16 to the current
14 members instead of 13.
Q12 Do you agree with the proposal to delete Section 27 and to amend the wording ofSection 25 of the Constitution on the balance of backgrounds on the IASB?
Some of us strongly oppose the proposals to add “market and/or financial regulators”
to Section 25 of the Constitution. While the following does not represent the majority
view of the CAC, we would note their view below because some other members findsomething convincing in their minority view (“we” hereafter represents the minority viewof the CAC);“Regulators can exercise the quite strong influence on the due process of the standardsetting, albeit indirectly, even now through the Monitoring Board. We accept that thethree-tier governance system of the IFRS foundation and the IASB, but believe that theaccounting standard-setting process per se should strictly be independent from theregulators and be left to the private sectors’ own discipline.
If it is needed to add some members with regulator backgrounds to the IASB, webelieve it should be limited to the capital market regulators. Financial regulators directly
regulate and supervise financial institutions and we are concerned that their regulation
principles have inherent conflicts with the market discipline which we expect the IASB
to respect.”Sincerely yours,Keiko Kitamura
Chair
Corporate Accounting Committee―4―