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Chapter 1: Q1IFRS (page 34)

What organizations are the two key international players in the development of international accounting standards? Explain their role.

Short Answer

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TheIOSCO (International Organization of Securities Commission) and theIASB (International Accounting Standards Board) are the two key international players involved in the development of international accounting standards.

Step by step solution

01

Meaning of FASB

The term Financial Accounting Standards Board refers to the board that regulates the establishment, improvement, and revision of standards with the aim of facilitating companies for accounting and reporting. This helps them learn how to record business transactions and show them to users of financial statements.

02

Role of IOSCO (International Organization of Securities Commission)

The IOSCO plays an important role in:

  • Developing and implementing internationally accepted and uniform standards on regulation, oversight, and enforcement.
  • Provision of high standards of technical support, education and training, and research to its members and other regulatory bodies.
  • Aims to create a robust global capital market and a global regulatory framework.
03

Role of IASB (International Accounting Standards Board)

The IASB plays an important role in:

  • Developing in the interest of the public, a set of uniform, high-quality, clearly understandable, enforceable, and International Financial Reporting Standards (IFRS Standards) that are accepted across the globe.
  • Serve the general interest of the public by building trust, progress, and financial stability in the global economy in the long term.

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Most popular questions from this chapter

Some accountants have politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Some use the term “politicization” in a narrow sense to mean the influence by governmental agencies, particularly the securities and Exchange Commission, on the development of generally accepted accounting principles. Others use it more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on).Instructions

(a) The Committee on Accounting Procedure of the AICPA was established in the mid-to late 1930s and functioned until 1959, at which time the Accounting Principles Board came into existence. In 1973, the Financial Accounting Standards Board was formed and the APB went out of existence. Do the reasons these groups were formed, their methods of operation while in existence, and the reasons for the demise of the first two indicate an increasing politicization (as the term is used in the broad sense) of accounting standard setting? Explain your answer by indicating how the CAP, the APB, and the FASB operated or operate. Cite specific developments that tend to support your answer.

(b) What arguments can be raised to support the “politicization” of accounting rule-making?

(c) What arguments can be raised against the “politicization” of accounting rule-making?

(FASB Role in Rule-making) A press release announcing the appointment of the trustees of the new Financial Accounting Foundation stated that the Financial Accounting Standards Board (to be appointed by the trustees)”…will become the established authority for setting accounting principles under which corporations report to the shareholders and others” (AICPA news release July 20,1972).

Instructions

  1. Identify the sponsoring organization of the FASB and the process by which the FASB arrives at a decision and issues an accounting standard.
  2. Indicate the major types of pronouncements issued by the FASB and the purpose of each of these pronouncements.

In what way is the Securities and Exchange Commission concerned about and supportive of accounting principles and standards?

Question: What is the benefit of a single set of high-quality accounting standards?

The expectations gap is:

  1. What financial information management provides and what users want.
  2. What the public thinks accountants do and what accountants think they can do.
  3. What the governmental agencies want form standard-setting and what the standard-setters provide.
  4. What the users of financial statements want from the government and what is provided.
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