The International Banking Standards Board

“ There is overpowering demand for high quality accounting criterions that are internationally accepted. It is of the extreme importance that the IASB delivers these every bit rapidly as possible. ”


a ) Outline the current construction of the IASB, foregrounding the major influences and controls on it. ( 30 % )

B ) Explain the chief advantages of high quality, internationally accepted accounting criterions and the chief challenges the IASB faces in developing them. ( 50 % )

degree Celsius ) Remark on the citation above and give a decision on its cogency. ( 20 % )


a )The International Accounting Standards Board ( hereafter “IASB” ) [ 1 ] replaced the International Accounting Standards Committee on April 1 2001. This represented the apogee of a restructuring undertaking based on the recommendations of the studyRecommendations on Determining IASC for the Future. [ 2 ] The IASB, which is based in London, is constituted by 14 board members drawn from nine different states, of whom twelve are full-time and 3 are parttime.

The composing of the rank is as follows: a lower limit of five former hearers, three former users of histories, three former preparers of histories, and one faculty member. The staying two can be drawn from any of these backgrounds or from a different background.

The IASB is entrusted with the duty to set up International Financial Reporting Standards ( IFRS ) and its end is to make conformance and compatibility around the universe. [ 3 ] Its mission statement is to supply “high quality, apprehensible and enforceable planetary accounting standards” [ 4 ] . This is a significant undertaking, given that the accounting rules by and large accepted in each single state can in pattern differ significantly between national legal powers.

The IASB is organised on the undermentioned lines. Its parental organic structure, the IASC Foundation is an independent entity holding two chief weaponries, viz. , the Trustees and the IASB, and in add-on it incorporates the International Financial Reporting Interpretations Committee and a Standards Advisory Council. The 22 Foundation Trustees of the IASC are empowered to name members to the IASB, to exert general inadvertence and administrative and managerial supervising, and to bring forth the financess needed to finance the operation. However it should be stressed that the IASB has sole and sole duty for set uping accounting criterions.

The focal point of the IASB is on the chase of a rolled work program. The work program is determined and updated at regular IASB meetings and reflects the aims and wide timetable of theMemorandum of Understanding[ 5 ] between the IASB and the US Financial Accounting Standards Board ( hereafter “FASB” ) which lays down the allegedRoadmap for Convergencebetween IFRSs and US GAAP between 2006 and 2008. [ 6 ] TheMemorandum of Understandingestablishes ends that the IASB and FASB have agreed to accomplish so as to ease the convergence of accounting standard-setting. [ 7 ] The long-run strategic precedence of both the IASB and FASB remains the constitution of a common set of high quality planetary criterions.

B )The overarching end of the IASB is the creative activity and care of a set of apprehensible, enforceable and effectual accounting criterions for consistent application around the universe. The object of this exercising is to try to vouch both equality and transparence in certain cosmopolitan fiscal statements compiled in different national legal powers across the Earth by technology a commensurate and smooth convergence of antecedently diverse national criterions of accounting reporting.. [ 8 ]

It is manifest that the accomplishment of such an terminal would ease international concern and investing, cut down commercial hazard and increase transparence, and better the general quality of fiscal describing around the universe. The IASB has resolved that if systematically dependable and effectual fiscal coverage substructure is to be established it must both embody and reflect four indispensable features: [ 9 ]

1. It is deemed indispensable that settled accounting criterions are consistent, comprehensive and founded on a crystalline set of general rules which strive to vouch that fiscal studies reasonably and accurately reflect all background and implicit in fiscal worlds.

2. Functional mechanisms must be put in topographic point to guarantee the acceptance of efficient and effectual corporate administration patterns, and that in bend these should integrate a status for rigorous systems of internal control which serve to use common accounting criterions.

3. Auditing patterns must be established in which the diverse users and prepares of histories in the outside universe can put assurance and trust, and which flatly set up that undertakings green goods studies which represent a true and just position of their economic public presentation and overall fiscal province.

4. It is necessary to implement a cogent surveillance and enforcement government which ensures that the cardinal regulations and rules as determined by the universally prevalent auditing and accounting criterions are both respected and applied..

The ‘Modelfor the Preparation and Presentation of Financial Statements‘ [ 10 ] was published by the IASB’s predecessor, the International Accounting Standards Committee in 1989. Popularly known as theConceptual Model, this papers lays down the indispensable constructs to be adhered to in the production of fiscal statements for external assessment and use. The Framework trades with such affairs as: qualitative features of fiscal information ; cardinal premises ; aims of fiscal statements ; elements of fiscal statements ; nucleus constituents of fiscal statements ; measuring of the points of fiscal statements ; capital care issues. [ 11 ]

That said, it is deserving underscoring that the Conceptual Framework is non accorded the full position of an accounting criterion. The same can be said of theStatement of Principlesof the UK Accounting Standards Board. This evidently constitutes a practical challenge because it renders application less certain and can ensue in a dilution of the rules it endeavours to intrench.

Despite this trouble, the Framework guides the current work of the IASB in its development of contemplated International Financial Reporting Standards and it influences the IASB’s turn overing reappraisal of established International Accounting Standards.. It is submitted that thismodus operandishould promote the harmonization of accounting criterions, and hone those processs and ordinances relevant to the presentation and substance of fiscal statements by puting down an implicit in conceptual principle for cut downing the figure of different accounting interventions allowed under international criterions.

The IASB faces a immense challenge in catering for the all the different categories of users of fiscal statements, who may seek to utilize those fiscal statements for a broad figure of intents. Given that users may include categories every bit diverse as, providers, loaners, trade creditors, investors ( current and possible ) , employees, clients ( current and possible ) , the general populace and Government bureaus, it is clear that the IASB has to take a huge array of different and sometimes viing involvements into history in finding the appropriate regulations of accounting. [ 12 ]

degree Celsiuss )It is really difficult to reason with the quotation mark under reappraisal, because there is obviously considerable demand among, in peculiar histories users, who rely upon histories to steer a multiplicity of concern and investing determinations, for high quality accounting criterions that are both internationally accepted and respected and universally applied. Given that inarguable truth the 2nd portion of the quotation mark is besides clearly good founded. Of class it would be desirable to present betterments to accounting criterions every bit shortly as possible. This observer can gestate of no ground to detain the debut of what would stand for a important betterment in conditions of finance and trade, in peculiar given the increasing globalization of concern and commercialism and the comparative growing in the figure of international minutess as opposed to national minutess with each go throughing twelvemonth. In simple words, concern is going of all time more planetary and accounting criterions must consolidate to reflect that new environment and pattern.

The demand and finding to accomplish high quality and internationally accepted accounting criterions is possibly best evidenced by the focussed cooperation between accounting standard puting organic structures witnessed in recent old ages. In 2004 the IASB started work on a undertaking in partnership with the US FASB which is aimed at the development of a allegedcommon conceptual model, in the hope of that such would ease the convergence and polish of the bing models of both accounting criterions Boards. [ 13 ]

Demand for tighter and more consistent accounting criterions has besides been fuelled by analysis of the high profile corporate prostrations of companies like Enron and WorldCom in recent old ages. [ 14 ] Accountants were widely criticised for scrutinizing mistakes in these instances, which have already proved the accelerators for a raft of new corporate administration regulations.. These immense corporate prostrations and others of their like have non merely given rise to increased demand for accounting standard betterment and consolidation but besides underline the really existent demand for conjunct action in this field.

In amount, it is submitted that the quotation mark under reappraisal is good founded in both its primary assertions..


WORD COUNT: 1574 ( excepting footers )Bibliography

Recommendations on Determining IASC for the Future: A Report of the International Accounting Standards Committee’s Strategy Working Party,Recommendations to the IASC Board,30 November 1999: hypertext transfer protocol: //

Mirza and Epstein,IFRS: Interpretation and Application of International Accounting Standards,( 2006 ) Wiley

Horngren, “Uses and Limitations of a Conceptual Framework, ”Journal of Accountancy,April 1981

Modelfor the Preparation and Presentation of Financial Statements, hypertext transfer protocol: //

Alfredson et al. ,Using International Accounting Standards, ( 2005 ) Wiley.

Lewis and Pendrill,Advanced Financial Accounting, ( 2004 ) Prentice Hall

International Accounting Standards Board web site: hypertext transfer protocol: //

Inman,UK accounting houses enjoy ?1bn bonanza in aftermath of Enron,The Guardian, 28 June 2006.

Memorandum of Understanding between the FASB and the IASB 27 February 2006: hypertext transfer protocol: // .

The IASB Conceptual Framework – An Introduction,Dr Philip Dunn,AccountingWeb, 9 May 2005:

hypertext transfer protocol: // id=140805 & A ; d=448 & A ; h=0 & A ; f=0.

International Accounting Standards Committee ( IASC ) ( 1998 ) ;“Shaping IASC for the Future”, Discussion Paper, December, 1998



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