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Around the globe, International Accounting Standards (IAS) are progressively replacing the many different accounting standards established by separate nations. Developed by the International Financial Reporting Standards (IFRS) Foundation, the IAS are a comprehensive set of standards that dictate how particular kinds of transactions and other financial events should be reflected in statements. As more companies are participating in the dynamic global business environment with shareholding and trade in several countries, the IAS are designed to provide a common international language for business affairs so that accounting practices are comparable across borders. If you are pursuing a career in the growing area of international accounting, read on to learn about everything you need to know about the IAS and how countries are complying with these standards for reforming their public accounting systems.
Structure and Roles of the IASB
The International Accounting Standard Board (IASB) is an independent, non-profit organization devoted to working in public interest. It is part of the IFRS Foundation and has the primary mission of creating high-quality, enforceable, and globally accepted standards that are based upon clearly articulated accounting principles. With a geographically diverse group of trustees, the IASB acts as a forum of transparent due process to lead collaborative efforts for progress towards creating improved global accounting standards. By engaging with investors, business executives, regulators, and professionals across the international accountancy profession, the IASB has developed all of the international standards for accounting practice from research and proposal through publication and post-implementation review.
Importance of International Accounting Standards
Although nearly every nation in the world has operated national accounts fairly primitively, within the the last decade, governments have realized that there is a strong need to adopt international standards to manage public spending with differing exchange rates, inflation, and interest rates. Adopting the IAS has provided significant benefits to the accountancy profession by enabling more reliable financial information, promoting better decision-making, improving accountability, and allowing comparison between organizations in different countries. Despite popular belief that the standards were dictated for developed countries, the IAS has taken into account the best accounting practices for the entire globe to overcome obstacles for overseas cooperation.
Adopting the Standards around the World
Created in 2001 by the IASB from vision to reality, the international standards have been adopted in more than 113 countries worldwide, including India, Hong Kong, Australia, Russia, Chile, South Africa, Turkey, Singapore, Pakistan, Taiwan, Malaysia, and the European Union, but not the United States. That being said, compliance with the IAS is expected to occur by 2016 to reduce the overall costs of comparing alternative investments and enhancing the quality of financial information across international boundaries. Furthermore, the vision of the global accounting standards has already been supported by several international organizations, such as World Bank, Basel Committee, IFAC, IMF, and the G20. Within the near future, the accounting standards are projected to harmonize accounting practices around the world so that accountants can maintain records that are comparable, understandable, and reliable.
The IASB has devised international standards to help accounting practices cross borders without being lost in translation of different languages, laws, regulations, or culture. In order to successfully build a career in global accounting in the 21st century, it is highly recommended that new accountants become aware of the International Accounting Standards that are building a common accounting language across nations.
