International Accounting Standards Board

The International Accounting Standards Board (IASB) refers to an autonomous body mainly responsible for developing and publishing a single or unified set of international accounting rules. It being an integral part of the International Financial Reporting Standards (IFRS) Foundation, serves to create rules for providing comparable and transparent information in financial reporting.

It has the mission to formulate a common high-quality set of international and understandable financial reporting standards in the interest of the public. It facilitates IFRS accounting standards for use in general-purpose financial reporting. It works for standard-setting of IFRS in association with the International Sustainability Standards Board (ISSB).

The International Accounting Standards Board is a standard-setting wing of the IFRS foundation that prepares a common, single set of enforceable, high-quality, globally accepted and understandable accounting IFRS standards. Furthermore, a diverse group of IFRS foundation trustees appoints and oversees the IASB. They appoint 14 IASB members that are 14 in number across varied geographical areas. 

It has the following goals:

• To improve the comparability of financial reports globally through the International Accounting Standards Board Conceptual Framework.
• To cut cost and sophistication for organizations reporting using multiple accounting standards.
• To increase accountability and transparency in financial statements.

The constitution of IASB has mandated it to have 14 members in the following manner:

• Four members for European nations.
• Four members related to the American continent.
• 4 members from the Oceania/Asia region
• 1 member out of the African continent 
• 1 member from miscellaneous region

Its governance and structure have below features:

• IASB’s operations remain accountable and transparent because of the efforts of the trustees.
• It develops IFRSs independently using rigorous and consultative procedures comprising global stakeholders.
• It operates without government funding but uses only private subscriptions.

On average, IASB meets 10 times annually in London:

• When all the International Accounting Standards Board Members remain present in plenary meetings &
• When meetings remain conducted by standing committees only.
• Sometimes, the board also conducts meetings using teleconferencing.

It gets its funds from its members through subscriptions that include regional accountants grouping, professional bodies of accountancy and national setters of standards. International accounting bodies and the World Bank are other institutions funding it.

In March 2001, the parent body of IASB, the International Accounting Standards Committee (IASC) Foundation, was set up as a non-profit corporation within the State of Delaware, US. Subsequently, on 1 April 2001, IASB took the role and responsibilities of standard-setting from its predecessor organization IASC. The restructuring outcome happened because of the recommendation made in the Recommendations on Shaping IASC for the Future report. Moreover, it came into being because IASC failed to make its standards accepted by a larger audience.

It had been criticized for formulating standards irrelevant to the users and investors of financial reports. In 2002, Europe adopted a law to enforce all listed firms listed on regulated stock markets to use IFRS Accounting Standards that started in 2005. It issued its first accounting standards, or IFRS 1, in 2003 under First-time Adoption of International Financial Reporting Standards. In the same year, it hosted the first annual meeting of standard-setters of world accounting. By 2006, IASB issued IFRS 8 under operating segments to decrease the mismatch between US Generally Accepted Accounting Principles (GAAP) and IFRS accounting standards. Moreover, in 2024, IASB has:

• Issued IFRS 18 under presentation and disclosure in financial statements that have improved usefulness, transparency and compatibility of financial performance of companies.
• Undertook first ever combined technical meeting of the IASB and International Sustainability Standards Board (ISSB)
• Global jurisdictions consulted it on miscellaneous use or adoption of IFRS sustainability disclosure standards.

All its roles and functions come under and are regulated by the IFRS Foundation Constitution, as follows;

• It has full responsibility for all technical matters concerning the financial reporting of the IFRS Foundation.
• It has full autonomy pertaining development and pursuit of technical agenda under requirements of consultations with the public and the trustees. 
• It develops IFRS used by businesses in 120 nations globally.
• It uses rigorous procedures, ensuring its standards become developed transparently and openly.
• Issuance and preparation of ÏFRS, besides interpretation and drafts exposure in line with the requirements of due process recorded in its constitution.
• Approves and issues the interpretations prepared by the IFRS Interpretations Committee.
• IASB’s standards provide direction and guidance without dictating accounting terms as they remain principle-based.
• It encourages consistent financial reporting throughout different industries and companies.

More importantly, because of its common framework related to accounting, it has promoted international trade.

Its importance can be summarized as follows:

• Investors and stakeholders accept the usage of IASB’s IFRS for financial reporting. 
• It has been designed to aid economic growth through accurate and openly verifiable financial data to stakeholders and investors. 
• It has been able to build the confidence and trust of investors in markets.
• All these measures have enhanced economic growth and investment globally in every segment of industries and countries. 
• It has played an important role in dealing with global financial challenges like the 2008 financial crisis and the Covid-19 pandemic.
• It has been crucial in international collaboration regarding successful agreements, such as joint projects with FASB and Norwalk agreements, to consolidate global accounting standards.