The International Accounting Board was formed in April 1st 2001. It is based in London and charged with the responsibility of formulating the International Financial Reporting Standards and advocating for the use of these standards. Its’ parent entity, The International Accounting Standard Committee was founded in 1973 as an independent privately funded organization responsible afor setting accounting standards. The IASC Foundation was formed as a non profit making corporation in the state of Delaware in the United States of America. The International Accounting Standards Board was bestowed the responsibility of accounting standard setting by the International Accounting Standards Committee as a result of the need to restructure the IASC Foundation (Hey-Cunningham, 33). This paper therefore discusses the background information of the International Accounting Standards Board and provides a brief summery of the recent accounting standards issued.
It is important to note that, the International Accounting Standards Committee plays a vital role in the existence and functioning of the International Accounting Standards Board. The reasons are as follows; first, the IASC oversees the activities of the IASB to ensure that the board abides by the rules governing it, follows the due process when setting standards and works towards the achievement of the set objectives. Second, the IASC is also in charge of structure and strategy of the IASB. It is the committee which has the final say on the number and the composition of the board members as well as the strategy of the Board. Third, the International Accounting Standards Committee carries out fund raising for the running and sustaining of both the board and the trustees. Lastly, the IASC is charged with the responsibility of appointing the board members.
The structure of the International Accounting Standard Board is comprised of the following; The International Accounting Standards committee being at the top of the structure and in charge of overseeing the work of the board, the structure and strategy and fundraising. The IASC is an independent entity with two main bodies; The IASB and the trustees which carry out accounting standard setting and board member appointments respectively. In addition the, IASB structure comprise of the International Financial Reporting Committee (IFRIC), which develop interpretations which are subject to approval by the IASB. Furthermore, there is the Standard Advisory Council which advices both the IASC and the IASB. Lastly working groups are also part of the IASB structure. They are simply task forces that are made to give expert advice to the board on individual agenda projects. Despite the IASC being the overseer of the work of the International Accounting Standards Board, the board has full mandate to develop and pursue its agenda (Hey-Cunningham, 33).
At this point of the discussion, it is important to look at the steps that are followed by the IASB when making the accounting standards. In accordance with the stipulated due process the following steps must be undertaken. One, the staff identify and review issues that go along with a particular topic and consider the application of the framework to the issues. Two, exchange of views by the staff and the National standard setters after a critical study of the National accounting requirements and practices. Three, consultations with the Standard Advisory Council, about the need to add the topic to the IASB’s agenda. Fourth, formation of the working group meant to give expert advice to the IASB and its stuff on the project. Five, publish a discussion draft that solicits for public comments. Six, publish an exposure draft approved by the IASB members including the alternative views of members dissenting it. Seven, publish within an exposure draft a basis for conclusion. Eight, put into consideration all comments received during the comment period. Nine consider the need to carry out public hearing and field test, if there is need, carry them out. Ten approve a standard by at least nine IASB members, including the views of the dissenting members. Finally, within a standard, publish a basis for conclusion and explaining (Deloitte, 2008).
The International Accounting Standards Board’s mailing information and phone number is as follows;
- The International Accounting Standards Board
- 30 Cannon Street
- London EC4M6XH
- United Kingdom.
- Phone: +44 20 7246 6410. (Deloitte, 2008)
The first most recent standard used by the International Accounting standard Board is the International Financial Reporting Standard 1 (IFRS 1), which deals with the cost of an investment on first time adaptors. In a nut shell’ the standard was first issued in 2003 and was amended in May 2008. The amendment was meant to change the way cost of an investment in different financial statements is measured on first time adoption of IRFS. The IASB amended two standards, that is; The IFRS 1 and the IAS 27. The amendment allows first time adopters to either use a deemed cost of either fair value or carrying amount from previous account to measure the cost of an investment. Furthermore, the amendment introduces a requirement to introduce dividend as an income in the separate financial statement of an investor. (International Accounting Standards Board, n.d). The second recent standard is the IFRS 2, which clarifies vesting conditions and cancellations on share based payments. Since share based payments awards are complex and vary, it is impossible to come up with one right answer. The new standard therefore, clarifies that, vesting conditions are performance conditions only and that, all cancellations regardless of whether they are entity or by other parties should be accorded same accounting treatment. (International Accounting Standards Board, n.d).
In conclusion The International Accounting Standards Board located in London plays a very significant role of standardizing accounting rules around the globe. It is responsible for coming up with acceptable ways of determining and presenting financial information. The board of 14 members works under the keen eye of the International Accounting Standards Committee which is also its financier.
Deloitte Touch Tohmatsu. Effective Dates of IFRSs and Recently Revised IASs. 2008. Web.
Hey-Cunningham, D. Financial Statements demystified. : Allen and Unwin. 2006
International Accounting Standards Board. IFRS and IAS Summaries: English. 2008. Web.