INTERNATIONAL ACCOUNTING STANDARD

International Accounting Standard



International Accounting Standard

Introduction

The International Financial Reporting Standards (IFRS) are international accounting standards for companies which are issued by the International Accounting Standards Board (IASB). They were founded in 2001 which were made to promote the use and application of the accounting standards. The intention of these accounting standards was due to the reporting of different accounting transaction and other circumstances reported in financial statements. In this paper we will discuss the structure of the IFRS Foundation and outline the main functions of its constituent bodies.

Discussion

The U.S. GAAP and IFRS are the two leading international accounting systems. The importance of IFRS to U.S. GAAP is at the expense of steadily enhancement. In particular, the obligations of European capital market-oriented businesses contributed to the application of IFRS in financial statements from 2005 and the full acceptance of IFRS financial statements of foreign issuers by the SEC beginning in 2007 (Charlotte W., 2007, pp. 71).

Objective of IAS (IFRS)

The objective of IFRS is to ensure comparability and reliability of information for management decisions. Accounting and its procedures is carried out by all organizations across the world. This is considered as the main language of business due to information which his required by the accounting managers for managerial decision making. Hence, in short the objective of IFRS is that each company across the globe should follow one accounting standard which should be accepted by them and can make simple and effortless to bring the worldwide business together. It is a set of financial accounting reporting standards which offers a transparency in financial data disclosure (it.toolbox.com).

The importance of IFRS

The importance of IFRS around the world increases due to the following reasons:

Meet rapid growth of the internalization of trade;

Develop interest in a single set of high quality accounting standards;

Meet the needs of financial markets and their financial statements give a higher profile and better international credibility;

Greater comparability of financial statements in the listed companies;

Meet investors' needs for information.

The older standard i.e. the International accounting Standards (IAS) (1973-2000) has been replaced by the IFRS. The Standard Advisory Council (SAC) is the IASB and the Board of trustees with an additional advisory body for disposal. The monitory board consists of at least 30 members.

Hence, the IFRS monitoring Board comprises of the international financial market regulators representatives and these representatives check and examine the activities of t he trustees. Recent members of the monitory board are, the Emerging Markets and Technical Committees of the International Organization of Securities Commissions (IOSCO), US Securities and Exchange Commission (SEC) along with the European Commission, the Financial Services Agency of Japan (JFSA). These members observed by the Basel Committee on Banking Supervision as a contributor in the Monitoring Board.

The monitoring board assists the security regulators by allowing the use of IFRS in their jurisdiction through which they effectively accomplished their mandates concerning market integrity, investor protection and capital formation. The chief responsibility of the monitoring board is to make sure that the trustees ...