IAS or International Accounting Standards

IAS or International Accounting Standards

– is the old name of IFRS or International Financial Reporting Standards.

The International Accounting Standards began as an attempt to harmonize accounting across the European Union, but the value of harmonization quickly made the concept attractive around the world. The IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC).

On April 1, 2001, the new International Accounting Standards Board (International Accounting Standards Board) took over the responsibility for setting International Accounting Standards from the IASC. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The International Accounting Standards Board has continued to develop standards calling the new standards the IFRS.

Comparable, transparent and reliable financial information is fundamental for the smooth functioning of capital markets. In the global arena, the need for comparable standards of financial reporting has become paramount because of a dramatic growth in the number, reach, and size of multinational corporations; foreign direct investments; cross-border purchases; sales of securities; and the number of foreign securities listings on the stock exchanges. Nevertheless, because of the social, economic, legal, and cultural differences among the countries, the accounting standards and practices in different countries vary.

To improve the comparability of financial statements, harmonization of accounting standards is advocated. Harmonization strives to increase the harmony between accounting principles by setting limits on the alternatives allowed for similar transactions. Harmonization differs from standardization in that the latter allows no room for alternatives even in cases where economic realities differ.

The international accounting standards (I.A.S’s) resulting from the harmonization efforts hold important benefits. Investors and analysts benefit from enhanced comparability of financial statements. Multinational corporations benefit from not having to prepare different reports for the different countries in which they operate. Stock exchanges benefit from the growth in the listings and volume of securities transactions.

The international standards also benefit developing countries and other countries that do not have a national standard-setting body or do not want to spend scarce resources to undertake the full process of preparing accounting standards.

The role of the International Accounting Standards Board

The most important driving force in the development of I.A.S’s is the International Accounting Standards Board (International Accounting Standards Board), an independent, privately funded accounting standard-setter based in London, United Kingdom.

The International Accounting Standards Board, established in 2001, is committed to developing a single set of high-quality, understandable and enforceable global accounting standards that require transparent and comparable information in general-purpose financial statements.

Standards issued by the International Accounting Standards Board are designated International Financial Reporting Standards (IFRSs).

Standards issued by its predecessor, the International Accounting Standards Committee (IASC), from 1973 to 2001, continue to be designated I.A.S’s. Many published sources use the term IFRSs to encompass IFRSs, I.A.S’s and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).

The International Accounting Standards Board, consisting of fourteen members (12 full time and 2 part time), follows due process of setting accounting standards, which allows for a great deal of consultation and discussion and ensures that all interested parties can express their views at several points in the standard-setting process. The final standard requires approval by at least eight members.

The International Accounting Standards Board uses a principle-based approach rather than a rules-based approach in issuing accounting standards. IFRSs thus provide guidance for applying the general principles to typical transactions and encourage professional judgment in applying them to transactions specific to an entity or industry.

The International Accounting Standards Board members are selected by the trustees of the IASC Foundation. In addition to reviewing broad strategic issues affecting accounting standards, the trustees raise funds for the International Accounting Standards Board and also appoint members to two other committees, IFRIC and the Standards Advisory Council (SAC). IFRIC interprets the application of IFRSs and provides guidance on financial reporting issues not specifically addressed by the IFRSs.

The SAC has forty-nine members with diverse geographic and functional backgrounds who provide advice to the International Accounting Standards Board and the trustees of the IASC Foundation. The chair of the International Accounting Standards Board is also the chair of the SAC.

Standards issued

As of today, 25 I.A.S’s and 16 IFRSs are issued and effective (see the list here). They cover a wide range of topics such as inventories, depreciation, research and development costs, income taxes, segment reporting, leases, business combinations, investments, earnings per share, interim financial reporting, intangible assets, employee benefits, impairment of assets, contingent liabilities, financial instruments, investment property, and agriculture.

Some I.A.S’s have replaced by IFRSs. The International Accounting Standards Board also added to its agenda a project to jointly develop with the Financial Accounting Standards Board of the United States a single conceptual framework that converges and improves upon the existing frameworks of both boards.

Relationships with other standard-setters

In addition to issuing accounting standards, the International Accounting Standards Board cooperates with national accounting standard-setters to achieve convergence in accounting standards around the world. Seven of the full-time members of the International Accounting Standards Board have formal liaison responsibilities with leading national accounting standard-setters (in Australia, Canada, Germany, France, Japan, the United Kingdom, and the United States) and are resident in their jurisdiction.

Here is a link to Wikipedia for a list of the International Financial Reporting Standards (IFRSs) and official interpretations, as set out by the IFRS Foundation. It includes accounting standards either developed or adopted by the International Accounting Standards Board (International Accounting Standards Board), the standard-setting body of the IFRS Foundation.

The IFRS include

• International Financial Reporting standards (IFRSs)—developed by the International Accounting Standards Board;
• International Accounting Standards (I.A.S’s)—developed by the International Accounting Standards Committee (IASC) and adopted by the International Accounting Standards Board;
• Interpretations originated from the International Financial Reporting Interpretations Committee (IFRICs) and Standing Interpretations Committee (SICs).

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