International Accounting Standards Board

¶ … history of the International Accounting Standards Board (IASB) begins with the inception of Board of the International Accounting Standards Committee (IASC) in 1973. The Committee operated until 2001. The reason for the inception of the Committee was an agreement between the accountancy bodies in a variety of countries, including Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland and the United States.

The function of the Committee was to set standards for the international professional activities of the accountancy bodies under the agreement. The International Federation of Accountants function to organize these activities. In 1981 the IASC received full autonomy to set the international accounting standards. Their function was further to publish discussion documents on accounting issues with international concern. In the year 2000, the IASC Board approved a new constitution as part of a restructuring program. In the same year, the European Commission's plans to require IASC standards for all EU listed companies became known.

The International Accounting Standards then became the minimum benchmark worldwide for all EU companies

The structure of the organization is depicted in the following diagram. The structure is designed to support those features that are regarded as desirable in establishing the legitimacy of a standard-setting organization: its members are technically expert, represent the wider community and are independent.

The structure of the International Accounting Standards Board is the result of a balance of organizational functions. The oversight body is composed of the Trustees of the International Accounting Standards Committee Foundation, the advisory body (the Standards Advisory Council) and the interpretative body (the International Financial Reporting Interpretations Committee). These bodies are representative of the community that they serve, reflecting diversity in terms of geographical and professional backgrounds. The requirements for membership relate to technical competence and the ability to function independently.

In terms of ethics, the IASB requires all its members to be meticulous in setting and following international accounting standards. The enforcement of these standards is also an important issue that should be applied uniformly worldwide. Noncompliance appears to be a problem, and the Board's reaction to this is the inception of regulating bodies in order to ensure enforcement.

One of the problems faced by the Board is the very fact that it is international. Problems related to this include the fact of cultural diversity. The code of the board is to recognize cultural differences and promote a culture of diversity within its professional activities. Standards should thus be set that transcend individual cultural values.

Issues that should be addressed include corruption fraud and misrepresentation, while dealing with the challenge of enforcing these regardless of cultural barriers. The Board thus works towards being globally accepted, and is currently operating in over 180 countries around the world on a consistent basis.