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IFRS The nature and operations of the IASB

IFRS The nature and operations of the IASB

IFRS The nature and operations of the IASB: The International Accounting Standards Board (IASB) is the independent, accounting standard-setting body of the IFRS Foundation.

The IASB was founded on April 1, 2001, as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (IFRS), previously known as International Accounting Standards (IAS) and promoting the use and application of these standards.

IFRS- International Financial Reporting Standards 

The International Financial Reporting Standards, usually called the IFRS Standards, are standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB) to provide a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. They are the rules to be followed by accountants to maintain books of accounts which are comparable, understandable, reliable and relevant as per the users internal or external. IFRS, with the exception of IAS 29 Financial Reporting in Hyperinflationary Economies and IFRIC 7 Applying the Restatement Approach under IAS 29, are authorized in terms of the historical cost paradigm. IAS 29 and IFRIC 7 are authorized in terms of the units of constant purchasing power paradigm.

IFRS The nature and operations of the IASB

The IASB was previously known as the International Accounting Standards Committee (IASC) until April 2001, when it became the IASB.

The IASC was originally set up in 1973 and was the sole body to have both responsibility and authority to issue international accounting standards. In 2001, when the IASB took over responsibility for international financial reporting, it took on all of the IASC’s standards (which were all prefixed with ‘IAS’ – e.g. IAS 2 Inventories, IAS 10 Events After the Reporting Period). The IASB amended many of the standards, but then began to issue its own standards, which were known as International Financial Reporting Standards (IFRS). This is why you see standards prefixed with IAS (IASC standards) and IFRS (IASB standards). The term ‘IFRS’ has become a somewhat generic term that refers to all the standards (both IAS and IFRS).

IFRS The nature and operations of the IASB

On December 31, 2001, The International Accounting Standards Foundation (IASF) was incorporated as a tax-exempt organization in the U.S. state of Delaware.On February 6, 2001, the International Financial Reporting Standards Foundation was also incorporated as a tax-exempt organization in Delaware. The IFRS Foundation is an independent, not-for-profit organisation. Its primary mission is to develop, in the public interest, a single set of high-quality, understandable, enforceable and globally accepted International Financial Reporting Standards (IFRS) based upon clearly articulated principles.

IFRS The nature and operations of the IASB

The IASB forms part the three-tier structure employed by the IFRS Foundation and is responsible for setting the IFRS and related technical activities. The IASB is overseen by the Trustees of the IFRS Foundation, responsible for the organisation’s governance, the appointment of IASB members and funding. The IFRS Foundation is publicly accountable to a Monitoring Board of capital market authorities.

IFRS The nature and operations of the IASB

The IASB originally had 13 full-time Board members, each with one vote. They are selected as a group of experts with a mix of experience of standard-setting, preparing and using accounts, and academic work. At their January 2009 meeting the Trustees of the Foundation concluded the first part of the second Constitution Review, announcing the creation of a Monitoring Board and the expansion of the IASB to 16 members and giving more consideration to the geographical composition of the IASB.

About IFRS:

The elements directly related to the measurement of the statement of financial position include:

  • Asset: An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.
  • Liability: A liability is a present obligation of the entity arising from the past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits, i.e. assets.
  • Equity: Nominal equity is the nominal residual interest in the nominal assets of the entity after deducting all its liabilities in nominal value.

The financial performance of an entity is presented in the statement of comprehensive income, which consists of the income statement (Statement of Profit/Loss) and the statement of other comprehensive income (usually presented in two separate statements). Financial performance includes the following elements (which are recognised in the income statement or other comprehensive income as required by the applicable IFRS standard):

  • Revenues: increases in economic benefit during an accounting period in the form of inflows or enhancements of assets, or decrease of liabilities that result in increases in equity. However, it does not include the contributions made by the equity participants (for example owners, partners or shareholders).
  • Expenses: decreases in economic benefits during an accounting period in the form of outflows, or depletions of assets or incurrences of liabilities that result in decreases in equity. However, these don’t include the distributions made to the equity participants.

Results recognised in other comprehensive income are limited to the following specific circumstances:

  • Remeasurements of defined benefit assets or liabilities (as defined in the standard IAS 19)
  • Increases or decreases in the fair value of financial assets classified as available for sale (with the exception of impairment losses)(as defined in the standard IAS 39)
  • Increases or decreases resulting from the application of a revaluation of property, plant and equipment  or intangible assets
  • Exchange differences resulting from the translation of foreign operations (subsidiary, associate, joint arrangement or branch of a reporting entity, the activities of which are conducted in a country or currency other than those of the reporting entity) according to the standard IAS 21 [
  • the portion of the gain or loss on the hedging instrument in a cash flow hedge (or a hedge of a net investment in a foreign operation, as this is accounted similarly ) that is determined to be an effective hedge

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