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The IASB, or International Accounting Standards Board, is an agency dedicated to establishing a set of independent, international accounting standards.
This body is made up of an issuing Board that is designated and supervised in turn by a group from different geographical areas and professional training in the area.
What is the IASB?
The IASB is a private entity whose mission is to develop and approve international financial reporting standards.
It is independent of the IFRS Foundation (International Financial Reporting Standards), which acts non-profit and whose purpose is to promote and publicize this set of standards in the public interest.
Those standards have to be developed with high quality, be easy to understand and apply and be accepted globally.
What is the role of the IASB?
The IFRS Foundation is in charge of raising funds to carry out the work carried out by the Board that prepares these standards. Banks being the main taxpayers because they are interested in promoting standards internationally.
Responsibilities of the IASB
The IASB, as the body in charge of preparing international financial and accounting standards, is responsible for ensuring that the Board’s agreement regarding international standards is complied with.
Among his responsibilities are the following.
- Prepare and write international accounting standards and financial information.
- Ensure that suitable procedures are established to review the observations or comments made to those that have already been published.
- Publicize the content before publishing the rules definitively.
- Promote the holding of public hearings to discuss new proposals.
- Keep a reservation on the technical procedure of the body.
- Promote the conduct of field tests in order to check the feasibility of the proposed standards.
Objectives of the IASB
The main objective of the IASB is to develop and generate public interest through the use of unified accounting standards that can be applied internationally.
This body also has as its main norm to achieve objectives of emerging and small economies of different sizes. Among its objectives are the following:
- You must define and promote a set of unique accounting standards to be used globally and with mandatory compliance that also guide high-quality solutions.
- Ensure that the standards and guidelines defined by the IASB are used in a transparent way to ensure that all financial participants in the world can make the best economic decisions with great confidence.
- Promote that the use of norms and guidelines be applied in a severe and rigorous manner and that there be convergence between the guidelines of each country and the international ones.
- Comply with the objectives associated with those previously mentioned, taking into account the specific needs of small and medium-sized entities and emerging economies, as many times as this is necessary.
The IASB was initially made up of 14 members chosen taking into account their professional competence and the practical experience they possess in the area. However, as of July 1, 2012, the number of members was increased to 16. However, one of those members is appointed president and up to two of them can be appointed as vice-presidents.
Since 2009 IASB members are appointed for an initial period of 5 years which can be renewed for 3 more years. Presidents and vice-presidents may serve second terms of 5 years but serving a maximum period of 10 years.
It is necessary to achieve a balance in the distribution of the representatives that make up this body and said distribution should be as wide as possible. As of July 2012, the following structure was agreed: 4 members from the Asia / Oceania region; 4 members from Europe; 4 members from North America; 1 member from Africa; 1 member from South America and 2 more from any area but taking care to maintain the general geographical balance.
What is mainly sought in the possible members who must integrate this body is that they demonstrate professional competence in the financial area and technical experience in the practice of international business and market management. Other required competences are:
- Specific criteria such as demonstrating technical competence and skill in handling accounting and financial reporting.
- Ability to work in a collegiate environment.
- Demonstrate judgment and good sense to make decisions.
- Demonstrate analytical skills.
- It must be disciplined, objective and upright.
- Show commitment to the work of the foundation and the public interest.
The IASB is a private body based in London and its main task is to develop a set of accounting and financial reporting standards that are internationally applicable.
In addition to preparing these standards, this body must also approve their interpretation and constantly review them in order to improve or adapt them to new situations.