Who approves the IFRS

The authority responsible for issuing the IFRS

The authority responsible for the issuance of international accounting standards is the International Accounting Standards Board (IASB), an organization formed April 1, 2001 and that the legacy of the International Accounting Standards Committee (IASC). The IASC was established in 1973 by the International Federation of Accountants (IFAC), the organization representing the international accounting profession, to promote the harmonization of rules for the preparation of financial statements of companies.

The origins: the IFAC and the IASC

The intention of IFAC, the goal of harmonization of accounting standards should be pursued through the publication of accounting principles, known as International Accounting Standards (IAS) which were used by the committees in charge of accounting of the issuance of member countries’ IFAC, as a reference for issuing and updating of national rules. With reference to the IASC, the accounting standards issued during the first years of activity, generally welcomed the accounting rules of the countries with the oldest tradition of accounting, primarily the United States and other Anglo-Saxon, and therefore contain rules for the detection of assets, liabilities, costs and revenues that differ considerably. These accounting principles, although it constitutes a valuable reference for the development of accounting standards by IFAC member countries, were not an independent body of accounting principles, which could be adopted in place of the existing national rules in a country. For this reason, during the years 1989 to 2000, the IASC has undertaken a process of updating the existing IAS in order to create a more comprehensive body of accounting principles.

The revision of IAS 90

In 1989, first, was published the Framework for the Preparation and Presentation of Financial Statements, which, among other things, defines the objectives of financial reporting, illustrates the fundamental characteristics of a budget, and elaborates the definition of capital assets and liabilities of positive and negative components of income, specifying the general principles that should govern their collection accounts. This document provides, therefore, a theoretical support to the existing IAS, helping to promote the acceptance and recognition by the international accounting profession, companies wishing to adopt IAS, and users of such financial statements and auditors.

Secondly, in 1989 the IASC undertook a review process of existing accounting principles, in order to improve quality and reduce the number of rules, alternatives to each other, for the detection amount of assets, liabilities, costs and revenues. In fact, the existence of different accounting treatments, as acceptable from a theoretical point of view, for the recognition of assets or positive and negative components of income, reduces the comparability of financial statements and, therefore, affect the quality of financial . This led to the revision of existing IAS, in 1993, the publication of 10 new accounting standards. Finally, in 1995 the IASC agreed with the International Organization of Securities Commissions (IOSCO), the organization that represents the supervisory boards of stock markets in the world, supplements the IAS, IOSCO necessary to accept that financial statements prepared corss-border at the offerings were prepared according to IAS. The trial ended May 17, 2000, when IOSCO announced that the evaluation process of the IAS was completed, and that he was allowed to accept brokerage fees to the financial statements comply with IAS for cross border offerings and listings of cross border .

The reorganization of 2001

The process of review and integration of existing IAS was followed in early 2001, the revision of the structure of the IASC. In fact, the existing structure was still dependent exclusively on the international accounting profession, and therefore inadequate for approval of accounting shared, they are recognized and accepted internationally. As a result, has been designed and implemented a new organizational structure that involved in the preparation of international accounting standards not only the accounting profession internationally.

In March 2001 the IASC Foundation was formed, a not-for-profit and independent, with headquarters in the United States, in the State of Delaware, from which depend on the Standards Advisory Council (SAC), the International Accounting Standards Board ( IASB) and the Standing Interpretations Committee (SIC). The IASC Foundation is governed by a board of trustees, composed of 19 members, which has the main function to find the financial resources needed to run the IASC Foundation, and to appoint the members of the SAC, the IASB, and the SIC. The composition of such bodies governed by the Constitution of the IASC Foundation, ensures adequate geographic representation of all stakeholders in the issue of generally accepted accounting principles: the international accounting profession, academics, investors and financial analysts, representatives of companies to which accounting principles are addressed, and, finally, auditors, responsible for certification of financial statements.

In particular, the SAC is composed of approximately 45 professionals, of different geographical origins and with different technical backgrounds, and has the main function to assist the IASB in determining the topics to which to give priority in the process of issuance or revision of international accounting standards . The IASB, however, composed of 14 experts in international accounting standards, is designed to prepare, discuss, and approve the international accounting standards and interpretations of the latter, prepared after due discussion, the SIC. In 2002, SIC has been renamed International Financial Reporting Interpretations Committee (IFRIC).

IFRS and IAS is no longer

Following the establishment of the IASC Foundation and the appointment of the IASB, the standards issued by the new organization will be called International Financial Reporting Standards (IFRS), and the latter will gradually replace the existing accounting standards, known as IAS, endorsed by the IASB on the day of his first meeting, in order to ensure continuity with the work of IASC IFAC.

As explained so far, the IAS can now be considered a shared body of accounting principles, and sufficiently complete and independent.Consequently, it is possible to understand the choice of the European Commission, refer to IAS in the preparation of financial statements of European companies. Alternatively, the European Commission could decide to develop a body of accounting standards, which would also lead to the harmonization of accounting within the EU market. However, these accounting standards, developed in a single European results would inevitably be different from IAS, and Europe were excluded from participation in the international accounting harmonization process, being able, finally, also hinder the ability of European companies raise capital on international markets.
The EU Regulation on introduction of international accounting standards has determined that “the term” international accounting standards “International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and related Interpretations (SIC / IFRIC interpretations), subsequent amendments of those standards and related interpretations, standards and related interpretations issued or adopted in the future by the International Accounting Standards Board (IASB). ”

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