What is International Accounting Standards Board

The International Accounting Standards Board (IASB) is an independent, privately funded accounting standards agency with headquarters in London. The board members represent nine countries and come from a variety of backgrounds as well as bring diverse credentials and experiences to the board. There are 14 board members, and each has one vote. The board members are appointed by trustees. The board is responsible for developing international financial reporting standards, and it follows an open form of due process in order to get this task accomplished. The IASB’s goal is to develop a set of high-quality global accounting guidelines for financial statements that will be understandable and enforceable. The IASB also collaborates with national accounting standards agencies to make sure that everyone is in agreement around the world. A handbook describes how the International Accounting Standards Board operates and proceeds with due process. The framework of the due process system is provided in the Constitution of the International Accounting Standards Committee (IASC) and the International Financial Reporting Standards (IFRS). The handbook reflects the public consultation conducted by the IASB in 2004 and 2005. The Trustees’ Procedures Committee (part of the IASC) has been charged with regularly reviewing and amending the due process procedure. This committee is responsible for amending the procedures of due process based on feedback from the IASB and its membership. In addition, the committee has been charged with reviewing proposed procedures on new projects and the composition of working groups. This handbook was approved on March 23, 2006.
The procedures in the handbook address the following requirements:
?   Transparency and accessibility: The IASB is responsible for adding topics to its agenda after it has surveyed the membership and conducted research on the topic. Proposed agenda items are discussed at IASB meetings, which are open to the public. IASB meetings are also broadcast and archived on the IASB’s Web site.
?   Extensive consultation and responsiveness: The IASB solicits feedback from various constituencies in order to collect information from a wide range of groups. In addition, the IASB arranges public hearings and field visits as well as sets up focus groups to promote discussion. After the IASB has listened to all of these groups, it adopts suggestions.
?   Accountability: The IASB explains its reasons if it decides to omit any nonmandatory steps of the consultative process as described in the constitution. The trustees are responsible for reviewing and ensuring compliance with the IASB’s procedures and mandate, considering the ISAB’s agenda, and conducting annual reviews of the IASB’s performance.
According to the Due Process Handbook, there are six stages to the process, and the trustees are responsible for ensuring that there is compliance at different points through the process. The stages are as follows:
1. Setting the Agenda The IASB has to consider the following items when deciding whether or not a proposed agenda item addresses the users’ needs. When considering future agenda items, the IASB staff is responsible for identifying, reviewing, and evaluating topics that may warrant the IASB’s attention. In addition, there may be new proposals that have arisen as a result of a change in the IASB’s conceptual framework. Agenda items are also generated via comments from other interested parties. There are times when the IASB receives requests from constituents to interpret, review, or amend existing publications. The staff is charged with compiling a list of these requests, summarizing major and common issues raised, and presenting them to the IASB.
2.  Project Planning When adding an item to its agenda, the IASB has to determine if it is feasible to conduct the project alone or jointly with another standard-setter. If it is a joint project, similar due process is followed under both approaches. After considering the nature of the issues and the level of interest among constituents, the IASB may establish a working group at this stage.
3.  Development and Publication of a Discussion Paper The IASB normally publishes a discussion paper as its first publication on any major new topic as a vehicle to explain the issue and solicit comments from constituents. If the IASB decides to omit this step, it states its reasons. In most cases, a discussion paper includes a comprehensive overview of the issue, possible approaches in addressing the issue, the preliminary views of its authors or the IASB, and an invitation to comment. This approach may differ if another accounting standard-setter develops the research paper.
4.  Development and Publication of an Exposure Draft Publication of an exposure draft is a mandatory step in due process. An exposure draft is the IASB’s main vehicle for soliciting feedback from the public. Unlike a discussion paper, an exposure draft sets out a specific proposal in the form of a proposed standard (or amendment to an existing standard). The development of an exposure draft begins with the IASB considering issues on the basis of staff research and recommendations, as well as comments received on any discussion paper, and suggestions made by the Standards Advisory Council (SAC), working groups, accounting standard-setters, and arising from public education sessions. After resolving issues at its meetings, the IASB instructs staff to draft the exposure draft. When the draft has been completed, and the IASB has voted on it, the IASB publishes it for public comment.
5.  Development and Publication of an International Financial Reporting Standards (IFRS) After resolving issues arising from the exposure draft, the IASB considers whether it should expose its revised proposals for public comment. 6. Procedures after an IFRS Is Issued After an IFRS is issued, the staff and the IASB members hold regular meetings with interested parties, including other standard-setting bodies, to help understand unanticipated issues related to the practical implementation and potential impact of its proposals.