Question

List and discuss the characteristics of the International Accounting Standards Board (IASB) that reinforced the importance of an open, transparent and independent process?

Answer 1

IASB was founded on February 6, 2001, as an independent accounting standard setter, it is a London-based organization which seeks out to set and enforce standards for accounting procedures. At present, more than 100 countries require or permit companies to comply with IASB standards. Moreover, IASB is also responsible for maintaining the IFRS (International Financial Reporting Standards). The organization was preceded by the IASC (International Accounting Standards Committee) being the parent entity.

IASB has worked towards the implementation of Global Accounting standards which is named as International Financial Reporting Standards (IFRS). IASB's current approach is to wider corporate reporting.

Following are the characteristics of IASB;

1. Setting up Guidelines: IASB conceive of and suggest areas in which Accounting Standards need to be developed.

2. Relevance: Relevant information is capable of making a difference in the decisions made by users. IASB is working to capable of making a difference in decisions if it has predictive value, confirmatory value, or both.

3. More Transparency: IASB has formulated the IFRS Standards to address this challenge by providing a high quality, internationally recognized set of accounting standards that bring transparency, accountability and efficiency to financial markets around the world.

4. Faithful Representations: Financial information must faithfully represent what it purports to represent. Faithful representation has three characteristics: completeness, neutrality and freedom from error. This led the IASB and the US standard-setter, the Financial Accounting Standards Board (FASB), to think about how they could better convey its meaning. They chose the concept of faithful representation.