International Accounting Standards Board

Examples of International Accounting Standards Board in the following topics:

• Global finance: initial considerations

  • The International Accounting Standards Committee (IASC) Foundation, formed in March 2001, is the parent body of the International Accounting Standards Board (IASB).
  • The IASB, formed on April 1, 2001, has assumed accounting standard-setting responsibilities from its predecessor body, the IASC (International Accounting Standard Boards: About Us, n.d.).
  • To develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards
  • To bring about convergence of national accounting standards and international accounting standards to high quality solutions (Hussey, 2005).
  • Even though the IASB standards are not enforced internationally at this time, the standards are quickly being processed.

• Objectives of Accounting

  • The Financial Accounting Standards Boards Statements of Financial Accounting Concepts No. 1 states the objective of business financial reporting, which is to provide information that is useful for making business and economic decisions.
  • These standards may be the generally accepted accounting principles of a respective country, which are typically issued by a national standard setter, or International Financial Reporting Standards, which are issued by the International Accounting Standards Board.
  • Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or Standard accounting practice.
  • International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.
  • Describe the objectives of accounting, distinguishing between Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)

• Expense Recognition

  • Expense recognition is an essential element in accounting because it helps define how profitable a business is in an accounting period.
  • In terms of the accounting equation, expenses reduce owners' equity.
  • The International Accounting Standards Board defines expenses as follows: "Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. "
  • Therefore, the accounting standards institute has established clear guidelines to minimize any subjective judgment regarding when to recognize expenses.
  • Generally, cash basis accounting is reserved for tax accounting, not for financial reports.

• Defining Liabilities

  • Probably the most accepted accounting definition of a liability is the one used by the International Accounting Standards Board (IASB).
  • The following is a quotation from the International Financial Reporting Standards (IFRS) Framework: "A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. "
  • Liabilities can also include deferred revenue accounts for monies received that may not be earned until a future accounting period.
  • An example of a deferred revenue account is an annual software license fee received on January 1 and earned over the course of a year.
  • For the current fiscal year, the company will earn 5/12 of the fee and the remaining amount (7/12) stays in a deferred revenue account until it is earned in the next accounting period.

• Introduction to IFRS

  • Many countries use or are moving towards using the International Financial Reporting Standards (IFRS), which were established and maintained by the International Accounting Standards Board (IASB).
  • They are occasionally called by the original name of International Accounting Standards (IAS).
  • The IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC).
  • On April 1, 2001, the new IASB 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).

• Why an accounting system is important

  • "Financial accountancy is governed by both local and international accounting standards".
  • pragmatically computed using extensive management information systems and internal controls, instead of complying with accounting standards
  • Also, note that financial accounting reports must be prepared in accordance with national and international accounting standards.
  • In the United States the Financial Accounting Standards Board (FASB) has been the designated independent entity for established accounting reporting standards since 1973.
  • Since so many organizations are global in scope, a relatively new entity, the International Accounting Standards Board (IASB) has come upon the scene.

• Disadvantages of LIFO

  • LIFO is facing pressures from international standards boards that may result in its possible complete elimination.
  • LIFO is facing pressures from both the International Reporting Standards Board in cooperation with the SEC and the U.S.
  • On November 15, 2007, the Securities and Exchange Commission (SEC) exempted foreign firms from including reconciliation from International Financial Reporting Standards (IFRS) to U.S.
  • Foreign public firms are now permitted to file using the International Financial Reporting Standards (IFRS) without reconciliation to U.S.
  • On June, 18, 2008, the SEC issued a press release stating that the world’s securities regulators are uniting to increase their oversight of international accounting standards.

• Differences Between GAAP and IFRS and Implications of Potential Convergence

  • Although, the standards setting board in a principle-based system can clarify areas that are unclear.
  • The convergence of accounting standards refers to the goal of establishing a single set of accounting standards that will be used internationally, and in particular the effort to reduce the differences between the US Generally Accepted Accounting Principles (US GAAP), and the International Financial Reporting Standards (IFRS).
  • The goal of and various proposed steps to achieve convergence of accounting standards has been criticized by various individuals and organizations.
  • The growing acceptance of International Financial Reporting Standards (IFRS) as a basis for U.S.financial reporting represents a fundamental change for the U.S. accounting profession.
  • State the difference between Generally Accepted Accounting Principles and International Financial Reporting Standards

• Sarbanes–Oxley Act of 2002

  • The Sarbanes–Oxley Act is a US federal law enhancing standards for all US public company boards, management and public accounting firms.
  • The Sarbanes–Oxley Act of 2002 is a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms.
  • The bill was enacted as a reaction to major corporate and accounting scandals affecting Enron, Tyco International and others.
  • Title I consists of nine sections and establishes the Public Company Accounting Oversight Board, providing independent oversight of public accounting firms.
  • SOX is a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms.

• Recording Purchases

  • In accounting, purchases are the amount of goods a company buys over the course of the year.
  • When purchases should be added to inventory depends on the Free On Board (FOB) policy of the trade.
  • Depending on the specific usage, it may stand for Free On Board or Freight On Board.
  • International shipments typically use "FOB" as defined by the Incoterm standards, where it always stands for "Free On Board. " Domestic shipments within the U.
  • S. or Canada often use a different meaning, specific to North America, which is inconsistent with the Incoterm standards.