WORLD ACCOUNTANT

International accounting standard board (IASB) is the body charged with responsibility of setting up standards in the bid to deal with some subjectivity and achieve comparability between organizations.

These standards are called accounting standards. IASB was set up in 1973 (as the International Accounting Standards Committee IASC) to work towards the enhancement and harmonization of financial reporting.

The old standards developed by IASB was called IASs, though still adopted by companies but, is gradually being replaced by the new standards called International Financial Reporting Standards (IFRS). It is worthy to note that IASB is an independent privately funded accounting standard setters that is headquartered in London.

BRIEF HISTORICAL BACKGROUND OF IASB

In March 2001, the IASC foundation was established as a non profit making corporation incorporated / registered in the USA. This IASC foundation is now the parent entity of the IASB. The IASB assumed the responsibility of setting accounting standards from the first day of April 2001.

This responsibility was formerly handled by International Accounting Standards Committee (IASC) – note that the difference in name lies only in the addition of the word foundation to the name of the later.

IASB is made up of 14 members drawn from nine countries and are equipped with vast knowledge of auditing, preparation of financial statements, using (interpreting) financial statements and teaching accounting – including taxation, and management accounting. 12 of these 14 members are full time members while the other 2 are part-time members.

IASC was able to issue 41 IASs before IASB took over and fully adopted the 41 IASs.

ORGANIZATION / STRUCTURE OF IASC FOUNDATION

The structure and organization of IASC foundation has the following main features:

1. The IASC foundation is an independent corporation having two main bodies- the Trustees and the IASB.
2. The IASC foundation trustees appoints the IASB members, exercise oversight and raise the funds needed for the smooth running of the organization.
3. The sole responsibility of the IASB is – setting of accounting standards.
4. There are also two additional bodies, The Standard Advisory Council and The International Financial Reporting Interpretation Committee (IFRIC)

In summary, the IASC foundation has four main arms VIZ:

1.  
   • The trustees
   • The IASB
   • Standard Advisory Council (SAC)
   • IFRIC

TRUSTEES

The trustees are made up of 19 individuals with diverse Academic, Geographical and Functional background. Apart from raising funds for IASC foundation, the trustees also do the following:

• Monitor the activities of IASC foundation,
• Approves IASC foundation’s budget, and
• Is responsible for changing constitution of the foundation. North America and Europe have more representatives than every other parts of the world, with suggestions from IFAC – International Federation of Accountants

STANDARD ADVISORY COUNCIL

As the name implies, the SAC provides advice to the board on various areas which includes:

• Formulation of groups, and
• Creation of additional office

IFRIC

IFRIC is comprised of 12 members and its main function is to give useful and timely guidance on the application and interpretation of IFRS. That is to say that they closely monitor the implementation of IFRS and quickly intervene whenever there is interpretation and application conflict.

OBJECTIVES OF IASB

The mission statement of the IASB contains the following as her formal objectives:

1. To develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in general purpose financial statements.
2. To provide the use and vigorous application of those standards.
3. To work actively with national accounting standard setters to bring about convergence of national accounting standards and IFRSs to high quality solutions.

The question that readily comes to mind after reading the above IASB objectives is – can this ever be achieved? Fact like the proposed adoption of IFRSs in the USA from 2014 suggests among other facts that the harmonization of global accounting standards is gradually being achieved.

BENEFITS OF HARMONIZING ACCOUNTING STANDARDS

• Cost saving
• Saves time
• Promotes global trade
• Promotes inter-border listing of securities
• Encourage foreign investment
• Give room for rapid growth in developing nations

 

RECAP / CONCLUSION

• You have known what IASB stand for
• You now know the year IASB was established (1973)
• You now know its predecessor
• You now have better understanding of the structure and organization of IASC foundation
• You can now state the official objective of IASB
• You can now see that there is improvement in the area of accounting standards harmonization.

 

Now, your view / comments is being required. What other milestones have been recorded by the move to harmonize global accounting systems and reporting?