International Federation of Accountants (IFAC)

The IFAC is a global organization formed in 1977 to develop a high-quality, harmonized international accountancy profession. It collaborates with 175 member organizations in 130 countries and supports four independent standard-setting bodies.

Definition

The International Federation of Accountants (IFAC) is a global organization established in 1977 aimed at fostering a reputable and consistently high-standard accountancy profession worldwide. Although IFAC does not itself issue accounting standards, it supports four independent standard-setting bodies:

  1. International Accounting Education Standards Board (IAESB)
  2. International Auditing and Assurance Standards Board (IAASB)
  3. International Ethics Standards Board for Accountants (IESBA)
  4. International Public Sector Accounting Standards Board (IPSASB)

The activities of IFAC and these boards are overseen by the Public Interest Oversight Board.

Examples

  1. Enhanced Ethics in Auditing: IFAC, through the IESBA, provides guidelines ensuring auditors follow stringent ethical standards, reducing incidences of conflict of interest and increasing public trust in financial statements.

  2. Public Sector Accountability: Through the IPSASB, IFAC aids in developing accounting standards for public sector entities, improving the transparency and accountability of government finances worldwide.

  3. Global Education Standards: By supporting the IAESB, IFAC helps set benchmarks for accounting education, ensuring consistency in the professional training of accountants globally.

Frequently Asked Questions (FAQs)

What does IFAC stand for, and what is its purpose?

IFAC stands for International Federation of Accountants. Its purpose is to develop a global accountancy profession with high-quality, harmonized standards.

Does IFAC issue accounting standards?

No, IFAC itself does not issue accounting standards but supports four independent standard-setting bodies that develop such standards.

How many member organizations does IFAC have?

IFAC has 175 member organizations spread across 130 countries.

What are the independent standard-setting bodies supported by IFAC?

The four independent standard-setting bodies are:

  • International Accounting Education Standards Board (IAESB)
  • International Auditing and Assurance Standards Board (IAASB)
  • International Ethics Standards Board for Accountants (IESBA)
  • International Public Sector Accounting Standards Board (IPSASB)

Who oversees the activities of IFAC and its boards?

The Public Interest Oversight Board oversees the activities of IFAC and its associated boards.

  • International Accounting Education Standards Board (IAESB): A board that develops standards and guidance for accounting education.
  • International Auditing and Assurance Standards Board (IAASB): A board that sets International Standards on Auditing (ISAs) and assurance engagements.
  • International Ethics Standards Board for Accountants (IESBA): A board that sets ethical standards and a code of conduct for accountants worldwide.
  • International Public Sector Accounting Standards Board (IPSASB): A board that develops accounting standards for public sector entities.
  • Public Interest Oversight Board (PIOB): An oversight body that ensures the activities of IFAC and its standard-setting boards serve the public interest.
  • Harmonized Standards: Uniform standards intended to align accounting practices across different jurisdictions globally.

Online References

Suggested Books for Further Studies

  • “International Accounting and Multinational Enterprises” by Lee H. Radebaugh, Sidney J. Gray, and Ervin L. Black
  • “Principles of International Financial Accounting” by Kathryn Cearns and Colin Richard W. Baxter Willoughby
  • “International Auditing: Practical Resource Guide” by John S. Rizvi
  • “Ethics and the Profession of Accounting” by Charles Culhane
  • “Public Sector Accounting” by Rowan Jones and Maurice Pendlebury

Accounting Basics: “International Federation of Accountants” Fundamentals Quiz

### What is the primary purpose of the International Federation of Accountants (IFAC)? - [ ] Issue accounting standards. - [x] Develop a global accountancy profession with harmonized standards. - [ ] Monitor compliance with tax regulations. - [ ] Provide financial resources for accounting firms. > **Explanation:** IFAC's primary purpose is to develop a global accountancy profession based on high-quality, harmonized standards, not issuing standards itself. ### How many independent standard-setting bodies does IFAC support? - [ ] Three - [ ] Five - [ ] Two - [x] Four > **Explanation:** IFAC supports four independent standard-setting bodies: IAESB, IAASB, IESBA, and IPSASB. ### Which board sets ethical standards for accountants worldwide? - [ ] IAESB - [ ] IAASB - [ ] IPSASB - [x] IESBA > **Explanation:** The International Ethics Standards Board for Accountants (IESBA) is responsible for setting ethical standards globally. ### What is the role of the Public Interest Oversight Board (PIOB)? - [x] To oversee the activities of IFAC and its boards. - [ ] To provide funding to IFAC. - [ ] To issue international accounting standards. - [ ] To audit financial statements worldwide. > **Explanation:** The PIOB oversees the activities of IFAC and its related boards to ensure that their work serves the public interest. ### Does IFAC directly issue International Standards on Auditing (ISAs)? - [x] No, it supports the IAASB, which issues these standards. - [ ] Yes, it issues ISAs directly. - [ ] No, it does not engage with auditing standards at all. - [ ] Yes, through its special audit division. > **Explanation:** IFAC supports the International Auditing and Assurance Standards Board (IAASB), which is responsible for issuing ISAs. ### How does IFAC contribute to public sector accounting? - [x] By supporting the IPSASB. - [ ] By directly auditing government financial statements. - [ ] By developing tax laws for the public sector. - [ ] By issuing financial regulations for public institutions. > **Explanation:** IFAC contributes by supporting the International Public Sector Accounting Standards Board (IPSASB) which develops standards for public sector accounting. ### What is the main focus of the IAESB? - [ ] To audit public entities. - [x] To develop standards for accounting education. - [ ] To issue tax guidance for accountants. - [ ] To regulate financial markets. > **Explanation:** The main focus of the International Accounting Education Standards Board (IAESB) is to develop standards and guidance for accounting education. ### How many countries are represented by IFAC's member organizations? - [ ] 50 - [ ] 100 - [x] 130 - [ ] 200 > **Explanation:** IFAC's 175 member organizations represent 130 countries. ### Which organization developed standards such as the Code of Ethics for Professional Accountants? - [ ] IAASB - [ ] IPSASB - [x] IESBA - [ ] IAESB > **Explanation:** The International Ethics Standards Board for Accountants (IESBA) developed the Code of Ethics for Professional Accountants. ### What is the mission of the IAASB? - [x] To develop and issue International Standards on Auditing (ISAs). - [ ] To provide accounting education globally. - [ ] To oversee tax legislation. - [ ] To manage public sector audits. > **Explanation:** The mission of the International Auditing and Assurance Standards Board (IAASB) is to develop and issue International Standards on Auditing (ISAs).

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Tuesday, August 6, 2024

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