STANDARD SETTING OVERSIGHT
Until 2011 the PIOB carried out a policy of 100% direct observation of meetings of the boards and committees under its mandate supported by staff briefings and due process analysis (limited reviews and extended reviews). A PIOB member was present at each meeting to determine whether due process was followed effectively and with proper regard for the public interest and to provide comments or recommendations. The knowledge that the PIOB had observed each meeting gave assurance to stakeholders that the public interest was being protected.
Direct observation enables the PIOB to evaluate the quality and effectiveness of the deliberation processes under its oversight mandate. PIOB staff prepares briefing memos to support every PIAC and CAG observation conducted by PIOB members, highlighting any relevant issue. Each direct observation is documented with an observation report. Based on this information, the PIOB forms an opinion on the appropriateness of each stage of the process used to develop individual standards.
In its 2010 review of the IFAC reforms, the MG recommended that the PIOB adopt a risk-based model for the post-2003-reform era of standard setting. In response, in 2011 the PIOB introduced a new model aimed at providing quality oversight in the public interest without relying on 100% direct observations.
This new methodology entails seven steps, as follows (link to right section of the VII Public Report)
1) Assign Team Leaders for Oversight Activities
The PIOB assignes PIOB members to lead the oversight activities of specific PIACs during the calendar year. These team leaders direct the risk assessment applied to each PIAC and establish, together with staff, the combination of oversight techniques appropriate to the PIAC. Close cooperation between board members and between board members and staff in a scenario of less than 100% direct observation is crucial to ensure the continuity of oversight processes. These assignments are for one year only to reduce the risk of regulatory capture. The team leader, with the support of other team members, works with the PIOB Secretariat to develop the oversight plan for that year.
2) Develop Oversight Assurance Models
As part of development of its oversight plan, the PIOB team leader proposes to the board an oversight assurance (OA) model to guide the nature and scope of its work for that year (see table 1). Based on its experience, the PIOB has formalized four OA models, each one offering a different level of assurance. The level chosen for each plan should be of sufficient intensity to enable the PIOB to conclude whether the activities of the PIACs and the CAGs follow due process and properly safeguard the public interest.
The oversight model adopted for each PIAC and its CAG can vary from year to year based on factors such as past experience, the PIOB’s confidence in PIAC and CAG members, their performance, and the content of their strategy and work plan.
3) Determine Oversight Techniques
The oversight assurance model proposed by each team leader and chosen by the board will determine the oversight procedures to be followed throughout the year. Two new oversight techniques were introduced and tried in 2011: remote observation and monitoring and reporting. These techniques enable the PIOB to oversee the outcomes and processes of those PIAC and CAG meetings not subject to direct observation. In addition, the model includes the due process analysis to be carried out on each project expected to be submitted for approval.
Table 1: Oversight Assurance Model
|INTENSITY of Oversight||WHEN||FEATURES||ASSURANCE|
|1||Very high||Risk of failure.
Third party verification
|2||High||Higher risks in standard development.
|3||Medium||Lower risk in standard development.
|Medium level of observations||Medium|
Highest level of confidence.
|Minimal or no observations||Lower|
Remote observation calls for PIOB members or staff to attend by phone or video conference part or all of a PIAC or CAG meeting. Monitoring and reporting consist of in-depth monitoring by PIOB staff of documents pertaining to the agenda as well as the minutes of the meeting. In both cases, an observation memo is issued by the observer analyzing due process of the meeting. These new techniques are designed to enable team leaders and ultimately the PIOB to determine whether the public interest has been served.
The standard-setting boards are required to deliberate in public, and all documents, including minutes, meeting summaries, exposure drafts and consultation papers, are posted on the IFAC website (www.IFAC.org).