Accounting Standards Setting Bodies Printable Version

Accounting Standards Setting Bodies Printable Version
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  1 CHAPTER ONE 1.0 INTRODUCTION A Standard Setting Organization (SSO) is an organization whose primary activities are to develop, coordinate, promulgate, revise, amend, reissue, interpret and/or  produce technical standards that are intended to address the needs of a group of affected adopters. Accounting standards setting bodies are national or international organizations that have  been delegated responsibility for setting Generally Accepted Accounting Principles  by statute in a country or  jurisdiction. Every country has its local accounting standards setting body, who primarily issues local standards for their respective countries. However, with the global consensus on the need to adopt harmonized international standards, the role of the local bodies has now been limited to regulating and ensuring  proper adoption of the international standards as well as providing guidance and assistance to the preparers of financial statements on the application of the standards. This paper attempts to assess the various accounting standards setting bodies. 1.1 The International Organisations The following bodies are responsible for the issuance of international accounting standards: a)   The International Accounting Standards Board (IASB)  –   this body is responsible for the issuance of the International Financial Reporting Standards;  b)   International Public Sector Accounting Standards Board (PSASB) issues International Public Sector Accounting Standards for Government/Public entities. c)   Financial Accounting Standards Board (FASB)  2 1.2   The National Organisations  The defunct Nigerian Accounting Standards Board (NASB) was responsible for the issuance of the Statement of Accounting Standards (SASs). However, with the repelling of the NASB Act and establishment of the Financial Reporting Council of Nigeria, coupled with the adoption of the International Financial Reporting Standards by the Government of Nigeria, the role of the new body is now that of regulatory rather than issuance of Standards. The regulatory bodies are different from the Standards Setting Bodies in-that, they monitor for strict compliance of standards set by the Standards Setting Bodies. Examples of the regulatory bodies are: a.   Financial Reporting Council of Nigeria (FRC)  b.   Financial Reporting Council of United Kingdom  3 CHAPTER TWO 2.0 INTERNATIONAL ACCOUNTING STANDARD BOARD The International Accounting Standards Board (IASB) was previously known as the International Accounting Standards Committee (IASC) until April 2001, when it became the IASB. The IASC was srcinally set up in 1973 and was the sole body to have both responsibility and authority to issue international accounting standards. In 2001, when the IASB took over responsibility for international financial reporting, it took on all the IASC's standards (w hich were all prefixed with ‘IAS’ –   e.g. IAS 2 Inventories, IAS 10 Events After the Reporting Period). The IASB amended many of the standards, but then  began to issue its own standards, which were known as International Financial Reporting Standards (IFRS) . The term ‘IFRS’ has become a somewhat generic term that refers to all the standards (both IAS and IFRS). The Structure of the IASB  4 2.1 IFRS Foundation Monitoring Board The Monitoring Board was created in January 2009 with the aim of providing a formal link between the Trustees and public authorities to enhance the public accountability of the IFRS Foundation. The Monitoring Board's main responsibilities are to ensure that the Trustees continue to discharge their duties as defined by the IFRS Foundation Constitution, as well as approving the appointment or reappointment of Trustees. The Monitoring Board meets the Trustees at least once a year, or more often if appropriate. The Monitoring Board consists of capital markets authorities responsible for setting the form and content of financial reporting. Through the Monitoring Board, securities regulators that allow or require the use of IFRS in their jurisdictions will be able to more effectively carry out their mandates regarding investor protection, market integrity, and capital formation. The current members of the Monitoring Board are representatives of the Board and the Growth and Emerging Markets Committee of the International Organization of Securities Commissions (IOSCO), the European Commission (EC), Financial Services Agency of Japan (JFSA), US Securities and Exchange Commission (SEC), Brazilian Securities Commission (CVM), Financial Services Commission of Korea (FSC), and Ministry of Finance of the People's Republic of China (China MOF). The Basel Committee on Banking Supervision participates in the Monitoring Board as an observer. The Monitoring Board decided to expand its membership to include additional authorities, primarily from major emerging markets (a maximum of four) and also to establish a mechanism to allocate two rotating seats in consultation with IOSCO. The Monitoring Board also introduced a periodic evaluation and assessments process for existing members every three years, beginning in 2013, against specified criteria for membership. It is currently chaired by Jean-Paul Servais, Vice-Chair of the IOSCO Board and Chairman of the Financial Services and Markets Authority of Belgium.  5 2.2 IFRS Foundation The IASB is the independent standard-setting body of the IFRS Foundation. The Trustees of the IFRS Foundation are accountable to a monitoring board. The Trustees of the IFRS Foundation make a commitment to act in the public interest. The principle objectives of the IFRS Foundation are to develop and promote the use and adoption of a single set of high quality financial standards; to ensure the standards result in transparent, comparable, and decision-useful information while taking into account the needs of a range of sizes and types of entities in diverse economic settings; and to promote the convergence of national accounting standards and IFRS. The Trustees are responsible for ensuring that the IASB is and is perceived as independent. Each member of the IASB is expected to exercise independence of judgment in setting standards. The members of the IASB are appointed by the Trustees on the basis of professional competence and practical experience. As is true for the Trustees, the members reflect a diversity of geographical and professional backgrounds. The members deliberate, develop, and issue international financial reporting standards. The functions of the Trustees are: 1)   The Trustees appoint the members of the IASB and related entities 2)   Ensure the financing of the Foundation 3)   Establish the budget for the IASB 4)   Monitor the IASB’s strategy and effectiveness. 2.3 IFRS Advisory Council The Advisory Council is the formal advisory body to the International Accounting Standards Board and the Trustees of the IFRS Foundation. It consists of a wide range of representatives from groups that are affected by and interested in the IASB work. These include investors, financial analysts and other users of financial statements, as well as preparers, academics, auditors, regulators, professional accounting bodies and standard-setters. In total, fifty-one organizations from across the world are represented on the Advisory Council and members are appointed by the Trustees.
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