International Accounting Standards Board which is generally known as IASB, is an independent body consisting of various members. The primary function of this body is to derive standards about accounting. It is overseen by another foundation by the name of IFRS. The full form of IFRS is International Financial Reporting Standards. Similar to IASB, its primary task includes developing IFRS standards. IASB operates throughout the world and establishes all measures related to IFRS.
Btw, you can read about GRI Sustainability Reporting Standards here.
What is IASB?
For the International Accounting Standards Board definition, we can say that it is an upgraded version of the Financial Accounting Standards Board. The only difference is that IASB works on the international level and establishes all rules and principles globally. The standards that this organisation approves get implemented worldwide and everyone follows it.
IASB was first established in 2001. The purpose of establishing such an organisation was to replace a similar body by the name of the International Accounting Standards Committee. After its inception, many members have become part of it, and the foundation is still active. There are various things that IASB overlooks. Let’s see each of them one by one.
Must Read About: IAS 1 – Presentation of Financial Statements
Functions of The International Accounting Standards Board
1. Preparing and Issuing IFRSs
This is the most basic thing that the board has to accomplish. The preparation phase requires extensive research and help from the experts. The committee that operates this consists of high aptitude and experience. They take all the necessary steps and prepare IFRSs. A lot of things go into play whenever preparing these standards. Many factors are responsible for this so that reports and standards come out full-fledged. Any flaw in these can lead to setbacks and careful examination is necessary here. If sometimes it is essential to revisit previously formed standards, IASB has to take care of that as well. You can say that the accounting standards board is the backbone in setting IFRS.
2. Approving Interpretations
Just like the International Accounting Standards Board, there is another committee called IFRS Interpretation Committee. When IASB accounting issues any standard, it gets transferred to this interpretation committee. This committee performs the function of interpreting this given report. By analysing it means that it will see through the proposed clauses and standards by IASB and fill the required gaps. You could say that both IASB and the interpretation committee are inter-related and operate on the same level.
Now once this interpretation along with the report is complete, it again gets back to the International Accounting Standards Board. Over here the function of the board is pretty simple. They just need to approve the interpretation provided by the interpretation committee. This interpretation goes through examination by the members. For it to proceed into the final interpretation phase, it needs the approval of at least 9 members from the panel. If it fails then in such a scenario, revamping is essential. So the entire process is to and fro between both IASB and Interpretation Committee. You could even say that both of them work with the input of each other.
3. Keeping Complete Transparency
International Accounting Standards Board has to keep transparency with the public and trustees regarding their on-going or past projects. It gives a much better sense of the reliability of the organization. With everything in front of the public eye, it becomes easier for them to proceed with the projects. One of the examples of this transparency comes in the form of meeting between members of IASB. Whenever a meeting occurs, it gets broadcasted live. This allows the general audience to see what exactly is going on in the establishment of standards. It also gives an idea about the agenda and what the future holds for IASB accounting.
As of present, there are 14 members in the International Accounting Standards Board. In the past few reforms have occurred in regards to the number of members. At some point, they were 16 but later on got changed to 14. The members include reputed people that have a strong background in the finance and accounting sector. The members get selected from various countries based on different factors. Right now Hans Hoogervorst, who is a former minister of health as well as finance for the Netherlands is acting as chairman.
General Structure of International Accounting Standards Board (IASB)
While IASB doesn’t work on some predefined structure, it does have a certain pattern whenever performing respective tasks. Generally, the whole process takes place in a few steps.
1. Establishing Agenda
In the very first step members have to establish an agenda for how to technically approach the proposed standard. This step usually informs background research and future effects of the standard on the global level.
For the second step, the board needs to assign members to carry out different segments. This plan acts as a skeleton for whatever research is necessary about the proposed standard.
Now after the research phase is over, the board creates an outline for the standard. This standard gets published on the public forum so that everyone can see it. It drives in some public comments over the standard and some opinions can even help in forming the standard.
4. Exposure Draft
This step involves getting feedback from the public on the actual standard. The exposure draft consists of the actual project and is mainly published to ask for public opinion.
After getting input from the public the standard starts its development.
6. Issuing IFRS
Finally, when everything comes into fruition, the IFRS standard gets issued.
We hope that this article by team Script Consultants has provided you all the necessary information and details about International Accounting Standards Board (IASB).
Also Read: What is Sustainability Management?
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