Internation Accounting Standards Boards & U.S. SEC Flashcards
What are the organizations/structure that govern International Accounting Standards?
Top Level = IFRS Foundation 3 Supporting organizations: 1) IFRS Advisory Council 2) IASB (International Accounting Standards Board) 3) IFRS Interpretations Committee
What is the IFRS Foundation and what do they do?
Independent not-for-profit private sector org.
Parent of the IASB
Appoints members of the IASB, IFRS Advisory Council, IFRS interpretations committee
Governed by trustees with 3 year terms that can be renewed
What is the objective of the IFRS foundation?
Develop a single set of high quality, understandable, enforceable & globally accepted financial reporting standard
Promote use & application of IFRS
Consider needs of a range of size & type of entities
What is the role of the IASB?
Establishes international financial reporting standards
IFRS based on framework
Has NO ENFORCEMENT power (enforcement is responsibility of the securities regulators in individual national jurisdictions)
IASB est. 2001
What is the role of the IFRS Advisory Council?
Advises IASB on priorities & views of interested organizations
Represents > 40 organizations from around the world
Members of the the council are appointed by the IFRS Foundation
What is the role of the IFRS Interpretations Committee?
Similar to FASBs Emerging issues task force
Identifies issues in the context of IFRS & issues interpretations
Interpretations reviewed by IASB
What is the International GAAP Hierarchy?
1) IFRS implementation guidance = specific guidance to event
2) Framework
3) Pronouncements from other standard setting bodies
What are the noteable differences between US GAAP & IFRS standards
IFRS is more principled based Less detailed than US GAAP Fewer Rules Requires more professional judgement Less literature to address exceptions
What are the IASB standards for Small Medium sized Enterprises (SME) ?
Only one single standard for companies that are not publicly traded
- Simplifies financial reporting by
- eliminating topics not relevant to SMEs
- simplifies recognition & measurement
- disclosures are reduced
- revisions to SME standards only once every 3 years
- only
- Simplifies financial reporting by
What is the process for the development of an IFRS?
1) Project added to agenda
2) Conduct research & issue DP (discussion paper)
3) Public Input
4) Issue EP (exposure draft)
5) Modify EP (if necessary)
6) Finalize & Issue IFRS
What is the IASB Framework?
Framework is used to develop GAAP and is no GAAP itself
Objectives are similar to FASB’s
- provide useful information to financial statement user
What is the objective of the IASB Framework?
Objective = Decision Usefulness
Objective Qualitative Characteristics:
- Relevance:
a) Predictive Value
b) Confirmatory Value
- Faithful representation:
a) completeness
b) neutrality
c) free from material errorWhat are the Constraints to the IASB Framework?
Materiality: ignore immaterial amounts
Cost - Benefits: cost of providing information should not outweigh benefit
What are the 2 assumptions made in the IASB Framework?
1) Accrual Method
2) Entity is a going concern
FASB has 4, E.G.U.T
What is the S.E.C and its purpose?
Securities and Exchange Commission
Has legal authority to set accounting standards but designates to the private sector - currently the FASB
Purpose:
- Enforcement!
- enforces compliance to U.S. GAAP for U.S. publicly traded companies
- enforces compliance to IFRS for any Foreign registrants
Promotes:
- efficient allocation of capital through open, orderly and fair securities markets
