International Accounting Standards Committee (IASC)

What is the International Accounting Standards Committee (IASC)?

The International Accounting Standards Committee (IASC) was established in 1973 to formulate and promote the use of international accounting standards. It was created by accounting bodies from nine countries and served as a pivotal force in the global standardization of accounting practices. The IASC was instrumental in creating what we now know as International Accounting Standards (IAS), which were eventually subsumed under International Financial Reporting Standards (IFRS) developed by its successor, the International Accounting Standards Board (IASB).

In 2001, the IASC was restructured to become the International Accounting Standards Board, under the governance of the IFRS Foundation. The IASB now sets international financial reporting standards designed to bring transparency, accountability, and efficiency to financial markets worldwide.

Key Functions of the IASC

Developing international accounting standards.
Promoting the use and application of these standards globally.
Achieving convergence between national and international accounting standards.

Examples:

IAS 1 - Presentation of Financial Statements: Establishes the overall requirements for the presentation of financial statements, guiding structure, and minimum requirements for their content.
IAS 17 - Leases: Provided guidelines on accounting for lease contracts, although this has since been replaced by IFRS 16.

Frequently Asked Questions (FAQs)

What is the difference between IASC and IASB?

IASC was the original entity responsible for developing and issuing international accounting standards. It was replaced by the IASB in 2001, which is now the authority on international financial reporting standards.

Why was the IASC replaced by IASB?

The IASC was replaced by IASB in order to improve the governance structure and enhance the process of developing international accounting standards, ensuring more rigorous and transparent standard-setting activities.

What is the IFRS Foundation?

The IFRS Foundation is a not-for-profit organization created to oversee the operational and administrative functions necessary to develop a single set of high-quality global accounting standards (IFRS). It includes the IASB and its various supporting committees.

Do companies still use International Accounting Standards (IAS)?

Yes, many companies still use IAS, as these standards remain valid until and unless they are replaced or updated by newer IFRS standards issued by IASB.

International Financial Reporting Standards (IFRS): These are a set of accounting standards developed and maintained by the IASB, intended to bring consistency to accounting language, practices, and statements globally.
International Accounting Standards Board (IASB): The current standard-setting body within the IFRS Foundation responsible for establishing IFRS standards.
Generally Accepted Accounting Principles (GAAP): A commonly followed accounting rule and procedure used in the USA, serving as the counterpart to IFRS globally.
Financial Accounting Standards Board (FASB): An independent entity responsible for establishing and improving financial accounting and reporting standards (GAAP) in the USA.

Online References

Suggested Books for Further Studies

“Wiley IFRS 2021: Interpretation and Application of IFRS Standards” by PKF International Ltd.
“Applying IFRS Standards” by Ruth Picker, Kerry Clark, John Dunn, David Kolitz, Gilad Livne, Janice Lourens, Leo van der Tas.
“International GAAP 2021” by Ernst & Young LLP.
“IFRS: A Quick Reference Guide” by Robert Kirk.

Accounting Basics: “International Accounting Standards Committee (IASC)” Fundamentals Quiz

### What is the primary purpose of the International Accounting Standards Committee (IASC)? - [x] To develop and promote international accounting standards. - [ ] To enforce national tax laws. - [ ] To regulate stock exchanges. - [ ] To administer corporate governance codes. > **Explanation:** The primary purpose of the IASC was to develop and promote the use and application of international accounting standards globally. ### When was the IASC replaced by the IASB? - [ ] 1985 - [ ] 1995 - [x] 2001 - [ ] 2010 > **Explanation:** The International Accounting Standards Committee (IASC) was replaced by the International Accounting Standards Board (IASB) in 2001. ### Which organization oversees the International Accounting Standards Board (IASB)? - [x] IFRS Foundation - [ ] Financial Accounting Standards Board - [ ] European Union - [ ] United Nations > **Explanation:** The IFRS Foundation oversees the International Accounting Standards Board (IASB), ensuring proper governance and functioning. ### How were standards developed by IASC referred to? - [ ] Generally Accepted Accounting Principles (GAAP) - [ ] Internationally Accepted Practices (IAP) - [x] International Accounting Standards (IAS) - [ ] Global Reporting Standards (GRS) > **Explanation:** Standards developed by the IASC were referred to as International Accounting Standards (IAS). ### What is a key distinction between IAS and IFRS? - [ ] IAS are recommendations, while IFRS are mandatory. - [x] IAS were issued by IASC, while IFRS are issued by IASB. - [ ] IAS apply only in Europe, while IFRS applies globally. - [ ] There is no distinction; they are the same. > **Explanation:** International Accounting Standards (IAS) were issued by the IASC, whereas International Financial Reporting Standards (IFRS) are issued by the IASB. ### What historical need led to the creation of the IASC in 1973? - [ ] Regulation of U.S. tax practices - [ ] Development of a global stock market - [x] Standardization of accounting practices internationally - [ ] Creation of national accounting bodies > **Explanation:** The IASC was created to address the need for standardizing diverse accounting practices internationally. ### What does IAS 1 pertain to? - [ ] Leases - [x] Presentation of Financial Statements - [ ] Tax accounting - [ ] Employee benefits > **Explanation:** IAS 1 relates to the presentation of financial statements, detailing their structure and minimum requirements. ### Which body governs the set of principles known as Generally Accepted Accounting Principles (GAAP)? - [ ] IFRS Foundation - [x] Financial Accounting Standards Board (FASB) - [ ] International Accounting Standards Board (IASB) - [ ] International Federation of Accountants (IFAC) > **Explanation:** The Financial Accounting Standards Board (FASB) governs the principles known as Generally Accepted Accounting Principles (GAAP) in the U.S. ### Which accounting body is the international counterpart of FASB? - [ ] U.S. Securities and Exchange Commission (SEC) - [ ] European Central Bank (ECB) - [x] International Accounting Standards Board (IASB) - [ ] World Trade Organization (WTO) > **Explanation:** The International Accounting Standards Board (IASB) is the international counterpart to the U.S. Financial Accounting Standards Board (FASB). ### What is the legislative foundation that supports IFRS standards? - [ ] U.S. Generally Accepted Accounting Principles (GAAP) - [ ] Basel Accords - [ ] Sarbanes-Oxley Act - [x] International Financial Reporting Standards (IFRS) > **Explanation:** International Financial Reporting Standards (IFRS) provide the legislative foundation that supports IFRS standards worldwide.

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