Question

For many, the idea of 'accounting regulation' is a fairly boring, mundane topic. It is something that exists. We are aware of accounting standards, we need to follow them. In some senses, the idea of accounting regulation is effectively taken-for-granted.

There has, however, been a growing research focus on the International Accounting Standards Board (the IASB, how they operate, what they do and how they do it). I, for example, have published a couple of papers this year on activities of the IASB. A lot of this research has suggested that the IASB as a group of technocratic experts, have significant power and influence, but also operate to function different types of politics.

1) What should the objective of accounting regulation be and does the current approach to regulation suffice (is it sufficient)?

If you could please include some external research that would be great :)

Answer 1

History of International Accounting Standards:

International Accounting Standards Committee (IASC) came into being on 29th June 1973 when 16 accounting bodies (viz. the Institute of Chartered Accountants from 9 nations, i.e., U.S.A., Canada, U.K. and Ireland, Australia, France, Germany, Japan, Mexico and Netherlands) signed the constitution for its formation.

Its headquarters is situated at London. The objectives of the International Accounting Standards Committee are to develop accounting standards which are to be observed in the presentation of audited financial Statements and to promote their worldwide acceptance.

Objectives of International Accounting Regulation:

The objectives of IASC which are set out in its revised agreement and constitution are:

(i) To formulate and publish in the public interest accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance and observation; and

(ii) To work for the improvement and harmonisation of regulation accounting standards and procedures relating to the presentation of financial statements.

In regard to the objective (i) stated above, i.e., worldwide acceptance and operation, this statement of Mr. J. L. Kirkpatrick, Chairman of the Board of IASC, delivered to the members of the Institute of Chartered Accountants, Ireland, is quite significant. According to him “when we sit around the IASC Board table and in the steering committee which creates the standard, we do so in our capacity as experts in Accounting and certainly not as auditors. It is irrelevant whether we are practitioners or not”. Therefore, the standards which are set by IASC are meant for universal acceptance.

However, IASB issued the following International Accounting Standards till to date:

IAS 1 — Disclosure of Accounting Policies.

IAS 2 — Valuation and Presentation of Inventories.

IAS 3 — Consolidated Financial Statements and the Equity Method of Accounting.

IAS 4 — Depreciation Accounting.

IAS 5 — Information to be disclosed in Financial Statements.

IAS 6 — Accounting Response to Changing Price.

IAS 7 — Statement of Changes in Financial Position.

IAS 8 — The Treatment on the Income Statement of usual Items.

IAS 9 — Accounting for Research and Development Activities.

IAS 10 – Contingencies and Events Occurring after Balance Sheet Date.

IAS 11 — Accounting for Construction Contracts.

IAS 12 — Accounting for Taxes and Income.

IAS 13 — Presentation of Current Assets and Current Liabilities.

IAS 14 — Reporting Financial Information by Segments.

IAS 15 — Information Reflecting the Effects of Changing Price.

IAS 16 — Accounting for Property, Plant, and Equipment.

IAS 17 — Accounting for Leaves.

IAS 18 — Revenue Recognition.

IAS 19 — Accounting for Retirement Benefits in the Financial Statement of Employee.

IAS 20 — Accounting for Govt. Grants and Disclosure of Govt. Assistance.

IAS 21 — Accounting for Effects of Changes in Foreign Exchange Rates.

IAS 22 — Accounting for Business Combinations.

IAS 23 — Capitalisations of Borrowing Costs.

IAS 24 — Disclosure of Related Party Transactions.

IAS 25 — Accounting for Investments.

IAS 26 — Accounting and Reporting by Retirement Benefit Plans.

IAS 27— Consolidated Financial Statements and Accounting for Investments in Subsidiaries.

IAS 28 — Accounting for Investment in Associates.

IAS 29 — Financial Reporting in Hyperinflationary Economics.

IAS 30 — Disclosure in the Financial Statements of Banks and Similar Financial Institutions.

IAS 31 — Financial Reporting of Interests in Joint Ventures.

IAS 32— Financial Instruments: Disclosure and Presentation.

IAS 33— Earning Per Share.

IAS 34— Interim Financial Reporting.

IAS 35— Discounting Operations.

IAS 36— Impairment of Assets.

IAS 37— Provisions, Contingent Liabilities and Contingent Assets.

IAS 38— Intangible Assets.

IAS 39 — Financial Instruments : Recognitions and Measurements.

IAS 40— Investment Property.

IAS 41 — Agriculture.

Moreover, The International Federation of Accountants (IFAC) which was held at the XI International Congress of Accountants in October 1977 had been set up in order to harmonise accounting, auditing and reporting practices in an area which will see growing interdependence of the commercial and industrial systems of the world.