What role does the IASB play

Organization of the IFRSB and emergence of new IFRS - German companies can influence

content

1 Importance of international accounting standards for German companies

2 The International Financial Reporting Standards Board
2.1 Origin and objectives
2.2 Bodies of the IFRSB
2.2.1 International Accounting Standards Committee Foundation
2.2.2 International Accounting Standards Board
2.2.3 Liaison Members
2.2.4 International Financial Reporting Interpretations Committee
2.2.5 Standards Advisory Council
2.2.6 Chief Executive / Technical Director / Commercial Director

3 Formal standard setting procedure - Due Process
3.1 Preparatory steps
3.1.1 Project proposal and inclusion in work program
3.1.2 Gathering information and further preparatory work
3.2 Draft Statement of Principles
3.3 Evaluation and advice
3.4 Exposure Draft
3.5 Evaluation and advice
3.6 International Financial Reporting Standard
3.7 Public Hearings and Field Tests

4 Possibilities for influencing German companies

5 conclusion

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1 Importance of international accounting standards for German companies

The importance of international accounting standards for German companies has changed fundamentally in recent years: While only a few years ago only internationally operating groups were affected by accounting according to international standards, this is now also playing an increasingly important role for so-called medium-sized companies.

One of the reasons for this development is the globalization of the capital markets. Since accounting data is an essential source of information for investors' investment decisions, the demand for globally understandable accounting principles is easy to understand. Another reason that makes accounting according to international standards a central issue for companies is the EU regulation of 2002, according to which from 2005 or 2007 at the latest all capital market-oriented European companies are obliged to prepare their annual financial statements in accordance with IFRS.[1]

The organization of the International Financial Reporting Standards Board (IFRSB) and the way in which new standards are created are shown below. In addition, it is shown how German companies can influence the work of the organization.

2 The International Financial Reporting Standards Board

2.1 Origin and objectives

Even if the IFRSB has only existed in its current form since 2001, it can still look back on over thirty years of history. On June 29, 1973, the International Accounting Standards Committee (IASC) was founded in London as a private organization by the professional associations of accountants from nine different countries. The founding members were Australia, Germany, France, Great Britain, Japan, Canada, Mexico, the Netherlands and the USA.

The aim of the establishment was the development of international accounting standards and the work towards their worldwide acceptance and compliance. The institution also pursues the improvement and harmonization of accounting principles, methods and procedures.

The accounting standards issued from the time the IASC was founded received little attention for the time being. This changed at the end of the 20th century. The European Union decided to work with the IASC. In addition to the EU, other large trade organizations such as the WTO and NAFTA also tried to dismantle international trade barriers. Accounting according to globally recognized and comparable standards became increasingly important.

Because of these facts, from 1999 the IASC revised its organization and objectives. "... [D] (t) he goals of the IASC [became] much more ambitious to develop a single high-quality set of global accounting standards based on the criterion of" decision usefulness ""[2] expanded . On April 1, 2001, the IASC was restructured, creating new bodies. The IASC was renamed the International Accounting Standards Board (IASB).

The IFRSB is mainly financed through donations. Another source of income are sales proceeds from publications. With an annual budget of around £ 11.3 million in 2003, the IFRSB describes itself as a “low budget organization”. Most of the income is used to pay for the approximately 60 employees. It is interesting to note that around 30 percent of donations are raised by large accounting organizations. The assumption that they hope that this will influence the work of the organization is obvious.[3]

2.2 Bodies of the IFRSB

The International Financial Reporting Standards Board (IFRSB) consists of various bodies. In order to meet the high demands that the association places on the standards it has passed, the institution consists of advisory and controlling bodies in addition to the International Accounting Standards Board (IASB), whose main task is the adoption of new standards. The following figure gives an overview of the structure of the organization.

Figure not included in this excerpt

Figure 1: Organizational structure of the IFRSB[4]

2.2.1 International Accounting Standards Committee Foundation

The umbrella organization of the IFRSB is the International Accounting Standards Committee Foundation (IASCF), which was established as a foundation in 2001 as part of the reorganization of the then IASC into the IASB in Delaware, U.S.A. It consists of 19 voluntary trustees, whose responsibilities are set out in a statute. The trustees are to monitor the work of the IASB and thus ensure the quality and international applicability of the standards adopted by the IASB.

The trustees appoint the members of the IASB, the International Financial Reporting Interpretations Committee (IFRIC) and the Standards Advisory Council (SAC). They are also responsible for:

the annual review of the strategy of the IASB and the efficiency of the work results achieved,

the annual budget of the IASB and its financing,

the dissemination and application of the standards adopted by the IASB,

the definition and improvement of the work processes of the IASB, IFRIC and SAC,

the approval of improvements to the statutes in compliance with the adoption process of new standards (due process) and

performing all functions of the IFRSB that are not expressly assigned to the IASB, IFRIC or SAC according to the Articles of Association.[5]

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[1] see Pellens, B .: International Accounting, 2004, foreword

[2] Baetge, J. / Thiele, S. / Plock, M .: The restructuring of the IASC, 2000, p.1033

[3] See Pellens, B .: International Accounting, 2004, p. 82

[4] See the homepage of the IASB, structure, March 31, 2005

[5] See the homepage of the IASB, constitution, March 31, 2005

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