The responsibility for the funding arrangements of the IFRS Foundation rests with its Trustees. They approve the budget of the IFRS Foundation and determine the basis for its funding. To enforce the organisation’s public accountability, the funding requirements are also discussed with the IFRS Foundation Monitoring Board.
Currently, the annual budget for the IFRS Foundation amounts to around £25million (please refer to the most recent Annual Report for the exact annual amount). However, the Trustees agree that an increase in budget over time may be necessary in order to realise the objectives set out in the Trustees’ 2011 strategy report. That report emphasises that achieving the mission of the organisation to establish IFRSs as global standards and the IASB as a global accounting standard setter includes not only the commitment to a rigorous standard setting process, but also various activities in areas such as interpretation, education and outreach.
How we are funded
The majority of the Foundation’s funding is based on national financing regimes relative to a country’s Gross Domestic Product (GDP). While funding mechanisms differ from country to country, most have established either a levy on companies, or an element of publicly supported financing. In addition, the organisation derives income from publications and related activities and from contributions from international accounting firms.
The principles guiding the funding regime
An appropriate financing regime for the IFRS Foundation is vital to ensure the independence of the organisation and its standard-setting process. It must enable the IASB to engage interested parties throughout the world in the shaping of financial reporting standards and to undertake all other related activities necessary to achieve the organisation’s objectives.
On the basis of the four funding principles agreed in 2006 (broad based, compelling, open-ended and country- or jurisdiction specific), and in accordance with the conclusions of the IFRS Foundation Strategy Review 2011, the Trustees are continuing their work towards a global funding system with the following features:
- It provides a long-term commitment of the jurisdictions.
- It has public sponsorship (either direct or implicit governmental or regulatory support).
- It has to remain flexible.
- Contributions are allocated proportionally.
- It should provide public accountability in the budget process.
For full details on the features of a global funding regime, please read the results of the IFRS Foundation Strategy Review 2011.