The financing of the IASB: An analysis of donor diversity

The U.S. Securities and Exchange Commission (SEC) and others are concerned about the funding of the International Accounting Standards Board (IASB), which is widely recognized as the global accounting standard-setting organization. Issues raised include the long-term viability and legitimacy of the IASB due to its historic reliance on voluntary donations, which in turn has led to questions about the IASB's independence and whether donors to the IASB might be able to exert undue influence in the standard-setting process. These issues are critical factors in the SEC's analysis of the adoption of International Financial Reporting Standards in the U.S. This exploratory study investigates these concerns by examining the funding of the IASB with a focus on the characteristics of donors and their national and stakeholder interest group diversity. While the IASB's donor base is still relatively small and voluntary contributions from individual corporations and public accounting firms are still substantial, the findings suggest that many SEC concerns are being addressed. More permanent funding mechanisms are being developed and more transparency of donors and the size of their contributions exist. The IASB's donor base has expanded in both geographic and stakeholder interest group diversity. No single entity or group appears to provide such a large amount of funding to suggest undue influence on the IASB. This holds for questions of undue geographic influence, as donations by country are now significantly correlated with measures of a country's economic and equity market size.