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Mission of the IFRS Foundation and the IASB (The vision (The International…
Mission of the IFRS Foundation and the IASB
Background
Mission to bring
Transparency
Enhancing the international comparability and quality of financial information
Enables investors and other market participants to make informed economic decisions
Accountability
Reducing the infromation gap between the providers of capital ad the people to whom they have entrusted their money
IFRS Standards provide information that is needed to hold management to account
IFRS Standards are also of vital importance to regulators around the world
Efficiency
Helping investors to identify opportunities and risks across the world, thus helping improving capital allocation
The use of a single, trusted accounting language lowers the cost of capital and reduced international reporting costs
A not-for-profit, public interest organisation with oversight by a Monitoring Board of public authorities.
The governance and due process are designed to keep our standard-setting independent from special interests while ensuring accountability to our stakeholders around the world
The vision
The International Accounting Standards Board
IFRS Standards are developed by the Board
The standard-setting body of the IFRS Foundation - an independent, private sector, not-for-profit organisation
Formed in 2001
The successor organisation to the International Accounting Standards Committee (IASC) which had been setting International Accounting Standards (IAS Standards) since 1973
London-based since their inception, but they have a
global mission
Committed to developing, in the public interest, a single set of high quality global accounting standards that provide investors, lenders and others with relevant, transparent and comparable information in general purpose financial statements
The vision in 2000: a single set of global accounting
standards
The founders of the Board set out the fundamental objective of the Board and the IFRS Foundation under which it operates in a Constitution adopted in early 2000
To develop, in the public interest, a single set of high quality,
understandable and enforceable global accounting standards that
require high quality, transparent and comparable information in
financial statements and other financial reporting to help participants in the world’s capital markets and other users make economic decisions.
That vision has been publicly supported by many international
organisations, including
G20
World Bank
International Monetary Fund (IMF)
Basel Comittee
International Organisation of Securities Commissions (IOSCO)
International Federation of Accountants (IFAC),
European Parliament and Council
That vision is consistent with the objective of the Board’s predecessor standard-setting body, the IASC, which developed IAS Standards from 1973 to 2000
The vision has not changed since 2000
In February 2012, the Trustees of the IFRS Foundation completed a Strategy Review and published their report
Reaffirmed their commitment to achieving the vision of global accounting standard
Confirmed that it is in the best interests of the global economy, and that any divergence from a single set of standards,once transition to IFRS Standards is complete, can undermine confidence in financial reporting
Convergence is not a substitute for adoption
Developing national accounting standards ay beastepping stone on the path towards adoption, but it is not a substitute for adoption
Convergence
May be an appropriate short-term strategy for a particular
jurisdiction and may facilitate adoption over a transitional period.
Not suitable for adoption
Adoption mechanisms may differ among countries and may require an appropriate period of time to implement
Different pathways towards adoption
Adoption is a voluntary public-interest decision by the legislative and regulatory authorities in individual jurisdictions
What are IFRS Standards?
Def -
a globally recognised set of standards for the
preparation of financial statements by business entitie
IFRS Standards prescribe
The items that should be recognised as assets, liabilities, income
and expense
How to measure those items
How to present them in a set of financial statements
Related disclosures about those items
How IFRS Standards are developed
IFRS Standards are developed by the IASB (the Board), which:
Is an independent standard-setting board
Overseen by geographically and professionally diverse body of trustees of the IFRS Foundation which is publicly accountable to a Monitoring Board of public capital market authorities
Has 14 (as of 2016) full time members drawn from 11 countries
and a variety of professional backgrounds
Members are appointed by, and accountable to, the Trustees of the IFRS Foundation
They are required to select the best available combination of technical expertise and diversity of international business and market experience
Has a staff of 150 people from 30 countries and is based in London
With a small Asia-Oceania co-ordination office located in Tokyo, Japan
Supported by an external IFRS Advisory Council, an Accounting Standards Advisory Forum (ASAF) of national standard-setters and an IFRS Interpretations Committee (the ‘Interpretations Committee’)
Offer guidance when divergence in practice occurs
Follows a thorough, open, participatory and transparent due process
Engages with investors, regulators, business leaders and the global accountancy profession at every stage of the process
The due process includes
Opportunities for public comment at various stages in the
development of a Standard
Board deliberations at meetings that are open to public
observation and are webcast
Public availability of all of the agenda papers that form the basis for the Board’s deliberations as well as all of the comments received from interested parties
Collaborates with the worldwide standard-setting community
The process for developing IFRS Standards
The Board follows a rigorous, evidence-based process for developing IFRS Standards
Agenda consultation
Request for information
3-5 year plan
Research programme
Research
Discussion Paper
Agenda proposal
Standards development
Exposure Draft
Final IFRS Standard
Implementation
Interpretation or narrow-scope amendment
Post-implementation review
Why adopt IFRS Standards?
Today, the world’s financial markets are borderless
Companies (including small companies) seek capital at the best price wherever it is available
Investors and lenders seek investment opportunities wherever they can get the best returns commensurate with the risk involved
To assess the risks and returns of their various investment opportunities, investors and lenders need financial information that is relevant, reliable and comparable across borders
The amounts of cross-border investment are enormous
The Organisation for Economic Co-operation and Development (OECD) estimates that worldwide Foreign Direct Investment (FDI) outflows in 2014 were US$1.415 trillion. The historically highest level was in 2007 (US$2.447 trillion)
Cross-border ownership of stocks and bonds amounts to many trillions of US dollars. For example, foreign ownership of US equities, corporate bonds and treasuries amounted to over US$16 trillion in 2014. And US investors held nearly US$10 trillion of foreign corporate stocks and bonds in 2014
The use of one set of high quality standards improves the comparability and transparency of financial information
and reduces financial statement preparation costs
When the standards are applied rigorously and consistently, capital market participants receive higher quality information and can make better decisions