Module 1:
The nature and operations of
the IASB
What you will learn?
Origins of International Accounting Standard
Boards (IASB)
Structure of IFRS Foundation
International Accounting Standard (IAS
standards) and International Financial
Reporting Standards (IFRS Standards) that are
currently in issue
The purpose of financial statements – The
Conceptual Framework for Financial
Reporting
Formation of the Board
The International Accounting Standards Committee (IASC)
was founded
1973
Accounting Standards were set by an IASC Board (13 country
members & up to 3 additional organisational members
IASC concluded that there must be a convergence between
1997 national accounting standards and practices and global
accounting standards
1 July International Accounting Standards Board – a new standards
2000 setting body was formed
The Board (IASB) took over from the IASC the responsibility
1 April for setting International Accounting Standards
2001 More than 140 accountancies body in IASC membership
(1973 – 2001)
Structure of the IFRS Foundation
The Monitoring Board
Appoints & advises
IFRS Foundation Trustees
Appoints Appoints Appoints
& Advises & &
oversees oversees oversees
The IFRS The IFRS
The IASB
Advisory Interpretations
(the Board)
Council Committee
Develop &
issues Interprets
IFRS Standards
Structure of the IFRS Foundation
Process for developing an individual standard
Establish an Advisory Committee to give advice
on issues arising in the project
Step 1 Consultation with the Advisory Committee and
the IFRS Advisory Council occure throughout the
project
IASB may develop and publish Discussion Papers
Step 2 for public comment
IASB develops and publishs an Exposure Draft
Step 3 for public comment
Step 4 IASB issues a final IFRS
Structure of the IFRS Foundation
Some differences between IFRS and GAAP
IFRS GAAP
International Generally
Financial Accepted
Acronym
Reporting Accounting
Standard Principles
A set of
Universal business
accounting
language is
guidelines and
Meaning followed while
procedures to
reporting financial
prepare financial
statements
statements
Developed
IASB FASB
by
Based on Principles Rules
Structure of the IFRS Foundation
Advantages of applying IFRS
A business can present its FS on the same basis as its
foreign competitors, making FS comparable
Cross-border listing will be facilitated, making it easier
to raise capital abroad
Companies with foreign subsidiaries will have a
common, enabling company-wide accounting language
Foreign companies which are targets for takeovers or
mergers can be more easily appraised
Standards in issue
IFRS
IFRS 1 First-time adoption of IFRS IFRS 10 Consolidated Financial Statements
IFRS 2 Share-based Payment IFRS 11 Joint Arrangements
IFRS 3 Business Combinations IFRS 12 Disclosure of Interests
Insurance Contracts
IFRS 4 (replaced by IFRS 17 since 1 Jan IFRS 13 Fair Value Measurement
2021)
Non-current assets held for Sale
IFRS 5 IFRS 14 Regulatory Deferral Accounts
and Discontinued Operations
Exploration for and Evaluation of Revenue from Contracts with
IFRS 6 IFRS 15
Mineral Resources Customers
IFRS 7 Financial Instruments: Disclosures IFRS 16 Leases
IFRS 8 Operating Segments IFRS 17 Insurance Contracts
IFRS 9 Financial Instruments
Standards in issue
IAS
Accounting for
Government Grants Financial
Presentation of
IAS 1 IAS 20 and Discolsure of IAS 32 Instruments
Financial Statements
Governance Presentation
Assistance
The Effects of
IAS 2 Inventories IAS 21 changrs in foreign IAS 33 Earnings Per Share
exchange rate
Statement of Cash Interim Financial
IAS 7 IAS 23 Borrowing costs IAS 34
Flows Reporting
Accounting policies,
Related Party Impairment of
IAS 8 changes in accounting IAS 24 IAS 36
Disclosure Assets
estimates & errors
Accounting and Provisions,
Events after the Reporting by Contingent Liabilities
IAS 10 IAS 26 IAS 37
Reporting Period Retirement Benefit and Contingent
Plans Assets
Seperate Financial
IAS 12 Income Taxes IAS 27 Statement (revised IAS 38 Intangible Assets
2011)
Investments in
Property, Plant and Associates and Joint
IAS 16 IAS 28 IAS 40 Investment property
Equipment Venture (revised
2011)
Financial Reporting
IAS 19 Employee Benefits IAS 29 in Hyperinflationary IAS 41 Agriculture
Economies
Conceptual Framework for Financial Reporting
Main purpose of Financial Statements
To give information to users (particularly investors and
creditors) so that they can make financial decisions
Underlying assumption
Going concern
Qualitative characteristics of financial information
Fundamental characteristics Enhancing characteristics
Relevance Comparability
Materality Verifiability
Faithful representation Timeliness
Complete Understandability
Neutral
Free from bias
Substance over form
Conceptual Framework for Financial Reporting
Five main elements of financial statements
as a result of past events
Asset
has a potential to produce economic benefits
a present obligation of the entity
Liability
as a result of past events
residual interest in the assets after
Equity
deducting all its liabilities
increase in assets or decrease in liabilities
Income
that result in increases in equities
decrease in assets or increase in liabilities
Expenses
that result in decreases in equities
Exercise
Assets and liabilities
Asset Liability Neither
$50,000 spent by a manufacturer on
training staff how to operate machinery
$10,000 spent by a business to patent its
technology
$30,000 expected expenditure on
redecorating business premises in the
upcoming year
$15,000 that a retailer expects to have to
repay to customers that return purchased
items within the 30 day statutory return
period
$100,000 losses expected by a car
manufacturer in the upcoming financial
year as a result of economic recession
$40,000 spent on equity shares in another
company