CONCEPTUAL FRAMEWORK & ACCOUNTING STANDARDS
Introduction to International Accounting Standards Board (IASB)
➢ Established in 2001.
- Its objective is to achieve convergence in the accounting principles that are used by business and other
organizations for financial reporting around the world.
➢ Effective April 2, 2001.
- The internal accounting standards board (IASB) assumed accounting standard setting responsibilities
from its predecessor body, the international accounting standards committee (IASC)
INTERNAL FEDERATION OF ACCOUNTANTS
IASC (1983-2000) – International Accounting Standards Committee
IASB (2001) – International Accounting Standards Board London
➢ Goal: create a single set of global accounting standards
➢ Issue: IFRS based on conceptual framework
THE INTERNATIONAL ACCOUNTING BOARDS STRUCTURE
MONITORING BOARD – RESPONSIBILITIES
➢ Participating in the process for appointing trustees and approving the appointment of trustees according
to the guidelines set out in the IRSF constitution; and
➢ Reviewing and providing advice to the trustees on their fulfillment of the responsibilities set out in the
IRSF constitution. The trustees will make an annual written report to the Monitoring Board.
International Financial Reporting Standards (IFRS) Foundation
o To develop a single set of high quality, understandable, enforceable and globally accepted International
Reporting Standards (IFRS) through its standard-setting body, the IASB;
o To promote the use and rigorous of those standards;
o To take account of financial reporting needs of emerging economies and small and medium-sized entities
(SMEs); and
o To bring about convergence of national accounting standards and IFRSs to high quality solutions.
International Accounting Standards Board (IASB)
RESPONSIBLE FOR:
o The development and publication of the IFRS, including the IFRS for SMEs.
o Approving interpretation of IFRs as developed by the IFRS interpretations Committee (formerly called
the IFRIC)
➢ The IASB engages closely with stakeholders around the world, including investors, analysts, regulators,
business leaders, accounting standard-setter and the accountancy profession.
International Financial Reporting Standards (IFRS) Advisory Council
➢ Provides a forum for organizations and individuals with an interest in international financial reporting to
participate in the standards setting process.
➢ The IASB is required to consult the IFRS advisory council in advance of Board decisions on major projects.
➢ The trustees of IFRS foundation must consult the IFRS advisory council in advance of any proposed changes
to the constitution.
International Financial Reporting Standards (IFRS) Interpretations Committee
➢ The mandate of the interpretation committee is to review on a timely basis widespread accounting issues that
have risen within the context of current IFRS and to provide authoritative guidance (IFRICs) on those issues.
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IASB STANDARD – SETTING PROCESS
Identify and review the issues.
IFRS Foundation Trustees and IFRS Advisory Council are
consulted.
IASB is required to carry out a public consultation.
Advisory group is formed.
Exposure draft.
Approval of STANDARD.
STANDARDS
International Financial Reporting Standards (IFRS).
Boards of the International Accounting Standards
Committee (IASC).
International Accounting Standards (IAS).
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WHAT ARE ACCOUNTING STANDARDS?
➢ Accounting Standards are authoritative statements of how particular types of transaction and other events
should be reflected in Financial Statements.
ARE INTERNATIONAL FINANCIAL REPORTING STANDARDS MANDATORY?
o A set of financial statements can only be described as complying with IFRSs if they comply with all
existing IFRSs and IFRICs, plus all existing IASCs and SICs.
o Companies and/or securities legislation in many countries requires management and directors of publicly
traded companies to prepare financial statements in accordance with IFRS.
o The accountancy profession is committed to promoting and supporting compliance with IFRS by preparers
and auditors of financial information.
o The requirements of all IFRS should be regarded as MANDATORY.
THE NEED FOR INTERNATIONAL ACCOUNTING STANDARDS
FROM THE VIEWPOINT OF COMPANY MANAGEMENT:
✓ It can cause preparation costs for financial reports that are much higher than necessary.
✓ Business will want to have a uniform system for assessing financial performance in their operations
in different countries.
➢ Investment analysts and other users of financial reports incur extra costs of analysis when the reports are
prepared according to different standards in different countries.
➢ Accounting reports will significantly lose credibility if a company reports different profit numbers in different
countries for given transactions.
➢ Magnitude of cross-border financing transactions, securities trading, and direct foreign investment is
enormous, often in smaller as well as larger countries.
PHILIPPINE ASC MOVES TO IAS
Support of International Accounting Standard
(IAS) by Philippine Organizations
Increasing Internationalization of Business
Improvement of International Accounting
Standards (IAS)
Increasing recognition of International
Accounting Standards Board (IASB) Standards
Developments in Philippine Accounting Standards (PAS)
➢ ASC Approves Re-Issuance as PASs of Previously Issued SFASs.
o To update these for consequential amendments arising from adopted new IFRSs and revised
IASs which resulted from the Improvements Project of the IASB and for editorial amendments
made to all existing IASs and;
o To maintain consistency of format and designation of Standards issued by the ASC.
➢ ASC Approves Issuance of New and Revised Accounting Standards.
o Accounting Standards issued by the ASC were re-named to corresponds better with the issuances
of the IASB.
o SFAS and SFAS/IASs NOT superseded by revised IASs and new IFRSs will be re-issued as
PASs.
➢ SEC Adopts PFRSs for SMEs.
o The Securities and Exchange Commission (SEC) En Banc resolved to adopt the Philippine
Financial Reporting Standards for Small and Medium Entities (PFRS for SMEs) as part of its
rules and regulations.
