Role and Evolution of Iasb
Role and Evolution of Iasb
“The role and history of the International Accounting Standards Board, including an examination of the Board’s evolution and stance on ethics issues.”
The International Accounting Standards Board, (IASB), began life as the International Accounting Standards Committee (IASC) in the 1973. The IASC was created in June 1973 as a result of an agreement by the accountancy bodies of Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland and the United States. These countries constituted the Board of IASC at that time.
The international professional activities of the accountancy bodies were organized under the International Federation of Accountants (IFAC) in 1977. In 1981, IASC and IFAC agreed that IASC would have full and complete autonomy in setting international accounting standards and in publishing discussion documents on international accounting issues. At the same time, all members of IFAC became members of IASC. This membership link was discontinued in May 2000 when IASCs Constitution was changed as part of the reorganization of IASC.
The main objective of the IASC was the development of International Accounting Standards, in an effort to reduce the differences in accounting practices across countries. Harmonization is the name given to the process of reducing differences in financial reporting practices and increasing comparability of financial statements in various countries. As such the intent of the IASC was to create a set of accounting rules that would be relevant and consistent to all countries involved.
The IASC started with the ten board members above but gradually expanded this number and also added associate members along the way. The first exposure draft was published in 1974 and in 1981 the organization began to pay visits to national standard-setters in its efforts to reduce the diversity of financial reporting practices. The IASC started its comparability project in 1987 and the following year it published E32: Comparability of Financial Statements. Also in 1988, the FASB joined the IASC Board as an observer and in 2000 lent support to having international standards. The growth and influence of the IASC was further confirmed that same year when the European Commission announced plans to require IASC standards for all EU listed companies from no later than 2005.
After a major reorganization, the IASC became the International Accounting Standards Board (IASB) in 2001. The IASB objective is very clear. As stated in their Constitution, the IASB’s goal is to develop a set of global accounting standards with the objective to have one set of standards that are relevant for creditors, investors and decision makers.
The IASB is structured