International Accounting Standard Board (IASB) is an independent, private-sector body (previously known as IASC), based in London. IASB is committed to develop and approve a single set of global accounting standards (that is known as International Financial Reporting Standards), which require transparent and comparable information in general purpose of financial statements.
The IASB arrogated its privately-funded accounting standard-setting responsibility for the establishment of a single set of global accounting standard (i.e. IFRS) w.e.f. 1st April 2001 From IASC, adopting all International Accounting Standards (IASs) and special interpretation committee in existence.
Functions of IASB
The IASB provides support and co-operation to the European Union and the International Organisation of Security Commission. The purposes of the conceptual framework of IASB are such as:
- Assist the board of IASB in developments of future International Financial Reporting Standard (IFRS) and the review of its existing IFRSs;
- Assist the board of directors in promoting the concept harmonisations of regulations, Accounting Standard, procedures and methods relating to the presentation of financial statements by reducing the number of alternative accounting treatments permitted by IFRS;
- Assist the National Standard- setting committees in the developing the National Standards;
- Assist the financial statements prepares to apply IFRS while preparing the financial statements;
- Assist the auditors to provide an opinion relating to financial statements whether IFRS guideline has complied while preparing the financial statements or not;
- Assist the users (investors, creditors, suppliers, employees, etc) of the financial statements in interpreting the information contained in the financial statements prepared in compliance with IFRSs as well as provide those who interested in the work of IASB about its approach to the formulations of IFRSs.
The primary functions of the IASB are as follows:-
Development and Creation of Global Accounting Standards
The primary purpose of the IASB is to develop a single set of high quality, understandable and enforcement accounting standard that require high quality, transparent and comparable information in financial statements as well as in the other financial reporting to help users of the financial statements to participate in the world’s capital market and to make economic decisions.
Enforcement of Standards
The IASB committee has the power to enforce the organisation to comply with the accounting standard that promotes the use and rigorous applications of those standards.
Systematic and in-depth research on enterprise
The function of the International Accounting Standard Board does in-depth research of special needs of small and medium-sized enterprise and emerging the economies in fulfilling the objective of harmonisation of an accounting standard.
Active convergence of Accounting Standards
The objectives of the IASB bring about the convergence of National accounting standard and IAS and IFRS to high quality, understandable and enforcement of Accounting Standards that require high quality and transparent information in the financial statements.
The goal of IASB is to make significant progress by identifying areas such as
- Conceptual framework of IFRSs;
- Fair value measurement;
- Financial statement presentations;
- Post-employment benefits;
- Revenue recognition;
- Liabilities and equities;
- Financial instrument;
- Intangible assets and lease.
We conclude that the primary function of the International Accounting Standard Board is more focused, and considering the changing global environment, and developing and maintaining the universal accounting standard for the promotion of its use and rigorous application of these accounting standards by the financial statements prepared. Several countries, including Brazil, Germany, India, Jamaica, Kenya etc. have taken a variety of approaches in implementing the IFRS with the main objective of enhancing national financial reporting practices in alignment with global level.
There are some challenges too in the way of implementing IFRSs. Lack of coherence in regulatory frameworks, insufficient legal backing of IFRS as reporting standard in a country, these are some practical challenges which are still posing as barriers for IFRS as a global standard.