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 apporval
Table 1: Oversight Assurance Model
Oversight assurance model When utilized Oversight techniques Level of oversight assurance
OA 1 -High systemic impact of failure
-Low confidence in PIAC -100% direct observation of PIAC meetings
- Independent third party verification High but at very high cost
OA 2 -High systemic impact of failure
-Insufficient experience levels in PIAC oversight
-Significant change in external environment -100% direct observation of PIAC meetings High
OA 3 -High or medium systemic impact of failure
-Good experience levels in PIAC oversight
-High confidence in PIAC
-Steady-state external environment -Medium levels of PIAC meeting observations Moderate
OA 4 -Low systemic impact of failure
-Good experience levels in PIAC oversight
- High experience in PIAC -Minimal or no PIAC meeting observation 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).
Due Process Oversight
Box 1 – PIOB oversight of the Standard-setting Process
Assessment point 1
The standard-setting board approves a project proposal. A task force (or several task forces in the case of larger projects), made up of board members and others, is set up to develop the project.
Assessment point 2
The task force consults with the board’s CAG to receive comments on the project proposal, which are conveyed to the board. The task force reports the results of the board’s deliberations back to the CAG. If it is agreed that the project will proceed, the task force writes the first draft.
Assessment point 3
The board considers whether a consultation paper or the holding of roundtables is necessary to develop the project further.
Assessment point 4
If this is the case, comments received are shared with the CAG.
The board approves and issues for public comment an exposure draft on the proposed standard together with an explanatory memorandum. The minimum exposure period is usually 90 days.
Assessment point 5
Comment letters are received from respondents. The staff and task force analyze these comments and prepare an issues paper for the board. This analysis includes an outline of the proposed disposition of comments and, as appropriate, the reasons to accept or not to accept changes recommended by respondents. The board deliberates and amends the draft standard accordingly.
Assessment point 6
The task force consults with its CAG on significant issues raised in comment letters to the exposure draft, and the CAG provides input on them. The CAG may offer comments verbally, which are included in the minutes.
Assessment point 7
The task force reports back to the CAG on how CAG comments have been dealt with by the board.
Assessment point 8
The board agrees on a final draft and considers whether changes introduced merit re-exposure. The board approves the final draft of the proposed standard by a required majority of members present at the meeting and, separately, considers and votes on re-exposure.
Assessment point 9
Senior board staff confirm that the board has followed due process in regard to the proposed standard. Board staff complete a basis-for-conclusions document, which summarizes the main comments received on public exposure of the proposed standard and explains how the board dealt with them.
The CAG chair provides the PIOB with a written report providing her/his opinion on the due process followed by the PIAC in responding to CAG input.
Assessment point 10
The standard is submitted to the PIOB for approval that due process has been followed with due regard for the public interest .
The standard is issued.