International Financial Reporting Standards (IFRS)

Subject Area Institutional and Market Infrastructure
Issuing Body International Accounting Standards Board (IASB)
Date of Issuance Ongoing
Location

http://www.ifrs.org/IFRSs/IFRS.htm

Summary Description

The IASB develops, in the public interest, a set of high quality, understandable, enforceable and globally accepted international financial reporting standards (IFRSs) based up on clearly articulated accounting principles.

Detailed Description

The International Accounting Standards Board (IASB) was established in 2001 and is the independent standard-setting body of the IFRS Foundation, an independent, private sector, not-for-profit organisation working in the public interest. Its principal objectives are:

 

  1. to develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted international financial reporting standards (IFRSs) based upon clearly articulated principles. These standards should require high quality, transparent and comparable information in financial statements and other financial reporting to help investors, other participants in the world's capital markets and other users of financial information make economic decisions;
  2. to promote the use and rigorous application of those standards;
  3. in fulfilling the objectives associated with (1) and (2), to take account of, as appropriate, the needs of a range of sizes and types of entities in diverse economic settings; and
  4. to promote and facilitate adoption of IFRSs, being the standards and interpretations issued by the IASB, through the convergence of national accounting standards and IFRSs.

The governance and oversight of the activities undertaken by the IFRS Foundation and its standard-setting body rests with a geographically and professionally diverse body of Trustees, who are also responsible for safeguarding the independence of the IASB and ensuring the financing of the organisation. The Trustees are publicly accountable to a Monitoring Board of public authorities.

 

The IASB is an independent group of experts with an appropriate mix of recent practical experience in setting accounting standards; in preparing, auditing, or using financial reports; and in accounting education. Broad geographical diversity is also required. Members are appointed by the Trustees through an open and rigorous process that includes advertising vacancies and consulting relevant organisations. The IASB has 16 full-time members.   

 

The IASB develops and maintains a set of accounting requirements collectively referred to as International Financial Reporting Standards (IFRSs). IFRSs are a set of high quality, understandable, enforceable and globally accepted Standards based up on clearly articulated accounting principles. The IASB has no authority to impose those Standards. However, entities that wish, or are required by a particular jurisdiction, to assert compliance with IFRSs must comply with all of the individual IFRSs (Standards) and IFRS Interpretations (Interpretations) issued by the IASB. The individual IFRSs and Interpretations that comprise the collective IFRSs are 41 Standards (issued as at 1 December 2013: 13 IFRSs and 28 International Accounting Standards developed by its predecessor, the IASC, and adopted by the IASB) and 25 current IFRIC Interpretations (17 developed by the IFRS Interpretations Committee (formerly the International Financial Reporting Interpretations Committee) and 8 developed by its predecessor, the Standing Interpretations Committee).

 

IFRSs generally contain principles and accompanying application guidance, both of which are mandatory and carry equal weight. Some Standards also include illustrative examples or implementation guidance, neither of which is part of IFRSs. They are therefore not mandatory. Each Standard and Interpretation has a basis for conclusions that explains the IASB's reasons for developing the particular requirements. The basis for conclusions is not part of IFRSs and is therefore also not mandatory.

 

Additionally, the IASB has a Conceptual Framework for Financial Reporting (the Framework). This Framework is designed to help the IASB develop IFRSs. The Framework is also designed to help those applying IFRSs address matters not covered by IFRSs. However, the Framework is not a Standard and the accounting requirements in an IFRS take precedence over the Framework.

 

The IASB develops IFRSs in the public interest. Through the IASB's due process, it consults and engages with investors, regulators, business leaders and the global accountancy profession at every stage of the process, whilst maintaining collaborative efforts with the worldwide standard-setting community. In developing IFRSs and Interpretations the IASB publishes and seeks public comment on Discussion Papers and Exposure Drafts. Those documents are not part of IFRSs.

 

The IFRS Interpretations Committee is the interpretative body of the IASB. The Interpretations Committee has 14 voting members appointed by the Trustees, and its members are drawn from a variety of countries and professional backgrounds. The Interpretations Committee's mandate is to review on a timely basis widespread accounting issues that have arisen within the context of current IFRSs and to provide authoritative guidance (IFRIC Interpretations) on those issues. The Interpretations Committee also develops proposals for narrow scope amendments to IFRSs on behalf of the IASB. In developing Interpretations and narrow scope amendments, the Interpretations Committee follows a transparent, thorough and open due process. However, it is the IASB that issues Interpretations and narrow scope amendments and the IASB that considers and votes on each Interpretation and narrow scope amendment before it is issued.

 

As well as IFRSs, the Board has issued IFRS for SMEs, to meet the needs and capabilities of small and medium-sized entities (SMEs) and users of their financial statements. Any company of any size is eligible to use the IFRS for SMEs, provided it does not have public accountability. An entity has public accountability if it is publicly traded, or if it is a financial institution or similar entity. The IFRS for SMEs is based on IFRSs but is much less complex.

 

 

 

Assessment Methodology

 

Description

As part of the Reports on the Observance of Standards and Codes (ROSC) initiative, the World Bank has established a program to assist its member countries in implementing international accounting and auditing standards for strengthening the financial reporting regime. The objectives of this program are two-fold:

 

  • Analyze comparability of national accounting and auditing standards with international standards, determine the degree with which applicable accounting and auditing standards are complied, and assess strengths and weaknesses of the institutional framework in supporting high-quality financial reporting.
  • Assist the country in developing and implementing a country action plan for improving institutional capacity with a view to strengthening the country's corporate financial reporting regime.
Issuing Body World Bank
Date of Issuance 2008
Location http://www.worldbank.org/ifa/rosc_aa.html