was in response to criticism from the world bank after the Asian
financial crises that the accounting profession was not doing
enough to enhance the accounting capacity capabilities in emerging
countries .
Started the Forum of Firms to raise global standards of accounting
and auditing (Details at www.ifad.org).
EU European Union :
See web site http://europa.eu/index_en.htm
The European Union EU was the EU was established by the Treaty of
Maastricht on November 1993 upon the foundations of the preexisting European Economic Community, founded in March 1957
with the signing of the Treaty of Rome by sex European nations
(Belgium, France, Germany, Italy, Luxemburg, and the Netherlands),
and now EU Comprising 27 member states .
The European Union EU Has worked to harmonize accounting
standards within the EU, primarily by way of two directives, EU
directives possess the force of law .
Fourth Directive 1978
a set of comprehensive accounting rules covering the content of
annual financial statements, their methods of presentation and
measurement and disclosure. The Fourth Directive built on the
principle of a true and fair view.
Seventh Directive 1983
requires consolidated financial statements for company groups of
a certain size.
International Accounting Standard Board (IASB)
International Accounting Standard Board was created in 2001 to
replace the predecessor, the IASC (International Accounting
Standards Committee).
IASC was established in 1973 by an agreement of the leading
accounting profession bodies in 10 countries (the United States of
America, Australia, Canada, France, Germany, Japan, Mexico,
Netherlands, United Kingdom and Ireland ).
The IASC harmonization effort from 1973 to 2001 evolved in
several phases, the initial phase was the issuance of 26 IASs, the
IASB Perspective
IASB attempts to follow a Principles-Based approach to standard
setting.
As such accounting standards are grounded in the IASB
Framework.
A Principles-Based approach
Represents a contrast to a Rules-Based Approach.
Attempts to limit additional accounting guidance (e.g., FASB
EITFs, FASB Interpretations).
Is designed to encourage professional judgment and discourage
over-reliance on detailed rules.
IASB Framework and IFRSs
IASB Framework (more details required in single file about
Framework).
The most important phase of harmonization activity is releasing
Framework for the Preparation and Presentation of Financial
Statements.
The objective and underlying assumptions of financial statements.
Qualitative characteristics of information.
Definition, recognition, and measurement of elements in financial
statements.
Concepts of capital maintenance.
Possesses objective and underlying assumptions of financial
statements.
Primary objective is to provide information useful to decision
making.
Underlying assumptions include accrual-basis and going concern.
Qualitative characteristics of information
Understandability should be understandable to people with
reasonable financial knowledge.
Comparability allows for meaningful comparisons to financial
statements of previous periods and other companies.
Accounting policies
Current/noncurrent.
Content of notes.
First Time Adoptions of IFRSs (IFRS 1)
Provides guidance for first time adoption.
Much used in 2005, particularly in EU.
Requires compliance with all effective IFRSs.
Allows exemptions when costs deemed to outweigh benefits.
Use of IFRSs
Evidence of support for IFRSs
IASB/FASB Convergence
The Norwalk Agreement
Reached in 2002 Between the IASB and FASB.
Is a promise of cooperation in standard-setting between the
International Accounting Standards Board (IASB) and the Financial
Accounting Standards Board (FASB).
IASB and FASB pledged to use there best effort to
1. make there existing financial reporting standards fully compatible
as soon as practicable .
2. to coordinate there work program to ensure that once achieved
compatibility is maintained
The Agreement Represents a significant step To work toward
accounting standards convergence to achieve international
harmonization..
IASB/FASB Convergence
1.
2.
3.
4.
5.
6.