“There is cutting appeal for aerial affection accounting standards that are internationally accepted. It is of the absolute accent that the IASB delivers these as bound as possible.”
a) Outline the accustomed anatomy of the IASB, highlighting the aloft influences and controls on it. (30%)
b) Explain the basic advantages of aerial quality, internationally accustomed accounting standards and the basic challenges the IASB faces in developing them. (50%)
c) Comment on the citation aloft and accord a cessation on its validity. (20%)
a) The All-embracing Accounting Standards Lath (hereafter “IASB”) replaced the All-embracing Accounting Standards Committee on April 1 2001. This represented the acme of a restructuring activity based on the recommendations of the address Recommendations on Shaping IASC for the Future. The IASB, which is based in London, is constituted by fourteen lath associates fatigued from nine altered countries, of whom twelve are full-time and 3 are part-time.
The agreement of the associates is as follows: a minimum of bristles above auditors, three above users of accounts, three above preparers of accounts, and one academic. The actual two can be fatigued from any of these backgrounds or from a altered background.
The IASB is entrusted with the albatross to authorize All-embracing Banking Advertisement Standards (IFRS) and its ambition is to actualize acquiescence and affinity about the world. Its mission annual is to accommodate “high quality, barefaced and acknowledged all-around accounting standards”. This is a abundant task, accustomed that the accounting attack about accustomed in anniversary alone country can in convenance alter decidedly amid civic jurisdictions.
The IASB is organised on the afterward lines. Its affectionate body, the IASC Foundation is an absolute article accepting two basic arms, namely, the Trustees and the IASB, and in accession it incorporates the All-embracing Banking Advertisement Interpretations Committee and a Standards Advisory Council. The 22 Foundation Trustees of the IASC are empowered to accredit associates to the IASB, to exercise accustomed blank and authoritative and authoritative supervision, and to accomplish the funds bare to accounts the operation. However it should be fatigued that the IASB has sole and absolute albatross for establishing accounting standards.
The focus of the IASB is on the following of a rolling assignment plan. The assignment plan is bent and adapted at approved IASB affairs and reflects the objectives and ample calendar of the Memorandum of Understanding amid the IASB and the US Banking Accounting Standards Lath (hereafter “FASB”) which lays bottomward the alleged Roadmap for Convergence amid IFRSs and US GAAP amid 2006 and 2008. The Memorandum of Understanding establishes goals that the IASB and FASB accept agreed to accomplish so as to facilitate the aggregation of accounting standard-setting. The abiding cardinal antecedence of both the IASB and FASB charcoal the enactment of a accustomed set of aerial affection all-around standards.
b) The overarching ambition of the IASB is the conception and aliment of a set of understandable, acknowledged and able accounting standards for constant appliance about the world. The article of this exercise is to attack to agreement both adequation and accuracy in assertive accustomed banking statements aggregate in altered civic jurisdictions beyond the apple by engineering a adequate and bland aggregation of ahead assorted civic standards of accounting reporting..
It is apparent that the accomplishment of such an end would facilitate all-embracing business and investment, abate bartering accident and access transparency, and advance the accustomed affection of banking advertisement about the world. The IASB has bound that if consistently reliable and able banking advertisement basement is to be accustomed it charge both actualize and reflect four basic characteristics:
1. It is accounted basic that acclimatized accounting standards are consistent, absolute and founded on a cellophane set of accustomed attack which strive to agreement that banking letters adequately and accurately reflect all accomplishments and basal banking realities.
2. Functional mechanisms charge be put in abode to ensure the acceptance of able and able accumulated babyminding practices, and that in about-face these should absorb a activity for austere systems of centralized ascendancy which serve to administer accustomed accounting standards.
3. Auditing practices charge be accustomed in which the assorted users and prepares of accounts in the alfresco apple can advance aplomb and trust, and which actually authorize that undertakings aftermath letters which represent a accurate and fair appearance of their bread-and-butter achievement and all-embracing banking state.
4. It is all-important to apparatus a cogent surveillance and administration administration which ensures that the axiological rules and attack as bent by the universally prevailing auditing and accounting standards are both admired and applied..
The ‘Framework for the Preparation and Presentation of Banking Statements‘ was appear by the IASB’s predecessor, the All-embracing Accounting Standards Committee in 1989. Popularly accustomed as the Conceptual Framework, this certificate lays bottomward the basic concepts to be adhered to in the assembly of banking statements for alien appraisement and usage. The Framework deals with such affairs as: qualitative characteristics of banking information; axiological assumptions; objectives of banking statements; elements of banking statements; amount apparatus of banking statements; altitude of the items of banking statements; basic aliment issues.
That said, it is annual emphasising that the Conceptual Framework is not accorded the abounding cachet of an accounting standard. The aforementioned can be said of the Statement of Principles of the UK Accounting Standards Board. This acutely constitutes a activated claiming because it renders appliance beneath assertive and can aftereffect in a concoction of the attack it endeavours to entrench.
Despite this difficulty, the Framework guides the accustomed assignment of the IASB in its development of advised All-embracing Banking Advertisement Standards and it influences the IASB’s rolling assay of accustomed All-embracing Accounting Standards.. It is submitted that this modus operandi should animate the harmonisation of accounting standards, and hone those procedures and regulations accordant to the presentation and actuality of banking statements by ambience bottomward an basal conceptual annual for abbreviation the cardinal of altered accounting treatments accustomed beneath all-embracing standards.
The IASB faces a huge claiming in accouterment for the all the altered classes of users of banking statements, who may seek to use those banking statements for a advanced cardinal of purposes. Accustomed that users may accommodate classes as assorted as, suppliers, lenders, barter creditors, investors (current and potential), employees, barter (current and potential), the accustomed accessible and Government agencies, it is bright that the IASB has to booty a all-inclusive arrangement of altered and sometimes aggressive interests into annual in free the adapted rules of accounting.
c) It is actual adamantine to altercate with the adduce beneath review, because there is acutely ample appeal among, in accurate accounts users, who await aloft accounts to adviser a complication of business and advance decisions, for aerial affection accounting standards that are both internationally accustomed and admired and universally applied. Accustomed that absolute accuracy the additional allotment of the adduce is additionally acutely able-bodied founded. Of advance it would be adorable to bear improvements to accounting standards as anon as possible. This analyst can accept of no acumen to adjournment the addition of what would represent a cogent advance in altitude of accounts and trade, in accurate accustomed the accretion globalisation of business and business and the about advance in the cardinal of all-embracing affairs as against to civic affairs with anniversary casual year. In simple words, business is acceptable anytime added all-around and accounting standards charge consolidate to reflect that new ambiance and practice.
The appeal and assurance to accomplish aerial affection and internationally accustomed accounting standards is conceivably best apparent by the focused cooperation amid accounting accustomed ambience bodies witnessed in contempo years. In 2004 the IASB started assignment on a activity in affiliation with the US FASB which is aimed at the development of a alleged common conceptual framework, in the achievement of that such would facilitate the aggregation and clarification of the absolute frameworks of both accounting standards Boards.
Demand for tighter and added constant accounting standards has additionally been fuelled by assay of the aerial contour accumulated collapses of companies like Enron and WorldCom in contempo years. Accountants were broadly criticised for auditing errors in these cases, which accept already accepted the catalysts for a bulk of new accumulated babyminding regulations.. These huge accumulated collapses and others of their ilk accept not alone accustomed acceleration to added appeal for accounting accustomed advance and alliance but additionally accentuate the actual absolute charge for concerted activity in this field.
In sum, it is submitted that the adduce beneath assay is able-bodied founded in both its primary assertions..
WORD COUNT: 1574 (excluding footnotes) BIBLIOGRAPHY
Recommendations on Shaping IASC for the Future: A Address of the All-embracing Accounting Standards Committee’s Strategy Working Party, Recommendations to the IASC Board, 30 November 1999: http://www.iasb.org/uploaded_files/documents/8_210_swp_rep.pdf
Mirza and Epstein, IFRS: Interpretation and Appliance of All-embracing Accounting Standards, (2006) Wiley
Horngren, “Uses and Limitations of a Conceptual Framework,” Journal of Accountancy, April 1981
Framework for the Preparation and Presentation of Banking Statements, http://www.iasplus.com/standard/framewk.htm.
Alfredson et al., Applying All-embracing Accounting Standards, (2005) Wiley.
Lewis and Pendrill, Advanced Banking Accounting, (2004) Prentice Hall
International Accounting Standards Lath website: http://www.iasb.org/Home.htm
Inman, UK accounting firms adore £1bn bonanza in deathwatch of Enron, The Guardian, 28 June 2006.
Memorandum of Understanding amid the FASB and the IASB 27 February 2006: http://www.iasb..co.uk/.
The IASB Conceptual Framework – An Introduction, Dr Philip Dunn, AccountingWeb, 9 May 2005:
International Accounting Standards Committee (IASC) (1998); “Shaping IASC for the Future”, Discussion Paper, December, 1998
 Recommendations on Shaping IASC for the Future: A Address of the All-embracing Accounting Standards Committee’s Strategy Working Party, Recommendations to the IASC Board, 30 November 1999: http://www.iasb.org/uploaded_files/documents/8_210_swp_rep.pdf. And see: All-embracing Accounting Standards Committee (IASC) (1998); “Shaping IASC for the Future”, Discussion Paper, December, 1998.
 See: http://www.iasb.org/Home.htm.
 Memorandum of Understanding amid the FASB and the IASB 27 February 2006: http://www.iasb.co.uk/.
 See: http://www.iasb.co.uk/.
 Annual of Sir David Tweedie, Chairman of the IASB, Before the Committee on Banking, Housing and Urban Affairs of the United States Senate, Washington DC, 9 September 2004: http://www.iasb.org/uploaded_files/documents/8_129_040909-dpt.pdf.
 See: Framework for the Preparation and Presentation of Banking Statements, http://www.iasplus.com/standard/framewk.htm.
 The IASB Conceptual Framework – An Introduction, Dr Philip Dunn, AccountingWeb, 9 May 2005: http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=140805&d=448&h=0&f=0.