The IFRS Foundation has appointed Michel Prada, a former chairman of two key committees at the IOSCO, as the new chairman of its board of trustees.
He is the former chairman of the Executive and Technical Committees of the International Organization of Securities Commissions, and has a reputation as an advocate of investor protection and independent standard-setting. Prada has also served in the French government as budget director and inspector general of finances in the mid-1980s.
Prada will be the first chairman of the IFRS Foundation since the death of Tommaso Padoa-Schioppa from a heart attack nearly a year ago (see IFRS Foundation Chairman Padoa-Schioppa Dies). The two vice-chairmen, Tsuguoki Fujinuma of Japan and Bob Glauber of the United States, have been serving as acting co-chairmen since last December.
Prada embarks on the job at a crucial time for IFRS. The IFRS Foundation oversees the International Accounting Standards Board. The foundation is due to deliver reports on governance improvements at the IASB, which the Securities and Exchange Commission will use to help make its determination on whether or not IFRS should be incorporated into the U.S. financial reporting system.
Last week, SEC chief accountant James Kroeker announced that the SEC would postpone its decision, which was expected by the end of this year, for a few additional months (see SEC Postpones IFRS Decision). At the same AICPA conference where he made that announcement, IASB chairman Hans Hoogervorst and Financial Accounting Standards Board chair Leslie Seidman said they wanted to end the convergence model the two boards had been following since 2002 for harmonizing U.S. GAAP with IFRS (see FASB Pushes for ‘Modified Incorporation’ of IFRS and FASB and IASB’s Irreconcilable Differences).
The U.S. is likely to play a diminishing role at the IASB unless the SEC votes to support IFRS next year, especially after the IASB and FASB finish their priority convergence projects.
Prada will serve an initial three-year term as IFRS Foundation chairman, effective Jan. 1, 2012. The IFRS Foundation Trustees’ Nominating Committee conducted an extensive global search for a successor to Padoa-Schioppa with the help of an international executive search firm. The recommendation for his appointment was unanimously supported by the IFRS Foundation Trustees and subsequently approved by the IFRS Foundation Monitoring Board, on which SEC chair Mary Schapiro sits.
Prada has been deeply involved in IFRS for over a decade. He served on the initial Nominating Committee that selected the new body of Trustees overseeing the independent standard-setting process in 2000 and was a leading proponent of European adoption of IFRS in 2005.
In his 12 years as chairman of the Autorité des Marchés Financiers, the French markets and securities regulator, and its predecessor organization, he was an outspoken advocate for investor protection and global standards. During that time he served as chairman of the Executive and Technical Committees of IOSCO and was a founding member of the Financial Stability Forum, now known as the Financial Stability Board. He worked closely with Hoogervorst at IOSCO.
Following the accounting-related failures of Enron and WorldCom in the United States and of Parmalat in Europe, Prada led the effort to establish the Public Interest Oversight Board of the International Federation of Accountants in 2005. More recently, he was a member of the Financial Crisis Advisory Group, formed to advise the IASB and FASB on their response to the financial crisis.
“It is an honor for me to be appointed to a position that was held by a series of prestigious chairmen,” said Prada. “As a securities regulator, I am convinced that fair and efficient markets in a globalized world require global accounting standards that meet the needs of investors and other market participants. I have long supported the role of the IASB for that purpose and the need for this organisation to build on appropriate governance and strong independence. I look forward working with my fellow trustees to support the IASB in delivering this vision.”
Prada currently serves as Chairman of the International Valuation Standards Council, co-chairman of the Council on Global Financial Regulation and a non-executive director of the International Centre for Financial Regulation.