Memorandum of Understanding for mutual cooperation between the Basel Committee on Banking Supervision and the IFRS Foundation

05 September 2017


The Basel Committee on Banking Supervision and the IFRS Foundation ("Foundation") have agreed to formalise their interaction through the publication of a Memorandum of Understanding ("MoU"). Such arrangements already exist between the IFRS Foundation and a number of organisations, including, for example, the International Organization of Securities Commissions.

Why formalise the IFRS Foundation and the Committee's relationship?

The relationship between the Committee and the IFRS Foundation is a long-standing one. The Committee has been an observer at the Foundation's Monitoring Board since the Monitoring Board's creation and has been continuously represented at the IFRS Advisory Council. The BCBS's Accounting Experts Group regularly interacts with representatives of the Foundation's standard-setting board, the International Accounting Standards Board ("Board"), in the form of bilateral and multilateral meetings, public comments on proposed accounting standards or amendments and other ad hoc contributions. In addition:

  • several issues cut across accounting and regulatory standards: classification categories and valuation of financial instruments; liquidity and capital standards; scope of consolidation; credit impairment and provisioning; disclosure; and the implementation of regulatory and accounting standards and related interpretation issues;
  • at the Group of Twenty summit in London on 2 April 2009, the G20 Leaders called on "the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards";
  • as representatives of public authorities, the Committee and Foundation have a responsibility to demonstrate that there is effective coordination and cooperation among standard setters and regulators, when and where relevant.

What form could such a formalised relationship take?

Even though the relationship between the Foundation and the BCBS pre-exists its formal recognition, there is value in agreeing an MoU via a public statement endorsed by both organisations. This MoU is not intended to change the relationship between the two bodies, but rather seeks to formalise the existing relationship, and thereby strengthen it. The MoU respects the independence of each organisation in form and in substance. As set out in the attached MoU, both organisations:

  • recognise that they have many common issues and objectives;
  • commit themselves to meeting and discussing issues in the deliberation phase of their respective policy development processes to ensure an understanding of each side's motivation for a proposed standard or reform; and
  • agree to work together where relevant and when this can benefit the high-level objective of serving the public interest while recognising the essential criteria of their continued independence - from each other and from other groups.