International Accounting

The International Accounting Standards Board's (IASB) main objective together with national standard setters is to set standards for financial reporting that will be used by businesses and organizations worldwide. The board has twelve full-time members and two part-time members. Of the twelve full-time members, seven members must have a "formal liaison responsibility with one or more national standard setter." (Hoyle, Schaefer, & Doupnik, 2004) There is no requirement of formal liaison responsibility for the remaining seven members of the board. "A minimum of five IASB members must have a background as practicing auditors, three must have a background as preparers of financial statements and three as users of financial statements, and at least one member must come from academia." (Hoyle, Schaefer, & Doupnik, 2004) This paper will examine the International Accounting Standards Board's role and history, as well as its evolution and stance on ethics issues.

The International Accounting Standards Committee (IASC) originated in June of 1973. It was later restructured to form the IASB on April 1, 2001. Accountancy bodies from the countries of the United States, Mexico, the United Kingdom, Ireland, the Netherlands, Japan, France, Germany, Australia, and Canada formed the board of IASC. The accountancy bodies fell under the organization of the International Federation of Accountants (IFAC) in 1977. Both the setting of international accounting standards and the publishing of discussion documents dealing with international issues were the primary responsibilities of the IASC. At this time the board consisted of representatives from fourteen different countries. For an International Accounting Standard (IAS) to become finalized, it required an approval from eleven of the fourteen board members. In an effort to gain the support of at least eleven members, the earlier IAS would allow two or more alternate methods for dealing with a specific accounting issue. Because of these compromises, the IASC standards issued during this time period offered very little comparability between the financial statements from country to country.

It was determined that the IASC would be reorganized. This took place in 2001 and resulted in the creation of the IASB. The IASB primary goal was to develop a set of global accounting standards. These standards were to have one set of standards that are applicable for the third party users of financial statement such as creditors, investors, and decision makers. The IASB was designed to analyze the previous standards and create new ones if necessary. As discussed in the opening paragraph, the committee consisted of fourteen members from varying backgrounds. This diversity brought about different viewpoints that are shared in a committee setting to achieve the most appropriate standards. Since its inception the IASB has developed the IASB's Framework and the International Financial Reporting Standards and Interpretations (IFRS). These standards are not mandatory nor can members of the IASB force companies to be compliant. The IFRS was designed to act as a set of global guidelines that applied from one country to another. Currently, the United States uses the Generally Accepted Accounting Principles to regulate how publicly traded companies prepare their financial statements instead of the IFRS. However there are many foreign regulatory bodies