International Financial Reporting Standards

The IASB, the Board of Directors of the International Accounting Standards Board, is a nongovernmental organization that creates and promulgates standards for financial reporting. The board works closely with the IASB to create, implement, and maintain high-quality global accounting standards. This is the only way to ensure that the financial statements of all companies in the world are comparable. The IASB’s governing document, which is referred to as the “G4” framework, defines what a company should report.

The IASB and the SEC met jointly in September 2002 and agreed to work together to improve U.S. GAAP and IFRS. The SEC’s Concept Release, which seeks public comments on IFRS, was issued in December 2007. It outlines the shared goal of creating high-quality accounting standards and the broad tactics for achieving them. The SEC has also endorsed this agreement. The SEC intends to consider whether the IASC’s proposed rules are “sufficiently rigorous and comprehensive.”

The SEC plans to review the IASC’s proposed standards. The standards are comprehensive and rigorous so that they are widely used and accepted around the world. Several organizations have called for the completion of high-quality international accounting standards. They have stated that the SEC should be the final arbiter on whether or not these are acceptable. Further, the Board expects to receive feedback on the Plan and will consider the proposals from the SEC. Click here

The SEC will continue to assess the IASC’s recommendations and develop its own regulations. The adoption of these standards will help to promote better information quality for investors. However, the SEC also has its own agenda. While it is difficult to implement a new rule that requires companies to comply with a new standard, a proactive approach to the development of financial reporting will make a difference. In addition, companies that are non-compliant may have difficulty receiving credit for their financial results.

Over 100 countries have adopted IFRS. The European Union and the G7 finance ministers have all called for the adoption of these standards. Moreover, if the IASC is not able to implement the IFRS, then companies will face a number of difficulties when trying to access finance. If the SEC does not approve the IASC’s standards, the business will be penalized. A non-compliant business will not receive credit from investors.

IFRS have been developed to ensure high-quality financial reports. Its adoption by countries is necessary for the success of a business. It is important to adopt the standards of another country, if the SEC does not support them, it will impose its own standard. This means that the IASC must be a fully functional organization with strong governance. It must be able to enforce the rules it sets for financial reporting.