The Evolution of the Iasc Into the Iasb, and the Challenges It Faces

The Evolution of the IASC into the IASB, and the Challenges it Faces1
Stephen A. Zeff Rice University
ABSTRACT: In this article, I undertake to review the major developments and turning-points in the evolution of the IASC, followed by the evolution of the IASB. At the conclusion, I suggest five challenges facing the IASB. Keywords: IASC; IASB; IAS; IFRS; standard setting; regulation

I.INTRODUCTION In the past several years, most accounting academics have been paying close attention to the International Accounting Standards Board (IASB) and its production of International Financial Reporting Standards (IFRS). In its short life, since 2001, the IASB has vastly reshaped the world map of company financial reporting. But it was the International Accounting Standards Committee (IASC), during its 27 years from 1973 to 2000, which set the stage for the IASB, which in turn emerged from the IASC.2 It is timely to provide some historical perspective that might shine a useful light on the IASB of today. My focus in this article will be on the major developments and turning-points in these 37 years of evolution, and to suggest some of the challenges that the IASB faces today. The story which unfolds in this article is based on historical research. Such research seldom yields simple, unambiguous explanations of causes and effects and the reasons for events and developments. Nonetheless, I have endeavored to use the fruits of this research to explain the evolution in the manner of a story, but with asides and occasional qualifications and digressions to bring out more than just two dimensions. I will emphasize the earlier more than the later years not only because it is
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I have drafted this paper based on my Presidential Scholar address at the annual meeting of the American Accounting Association on August 10, 2011 in Denver, Colorado. I gratefully acknowledge the comments on earlier drafts by Kees Camfferman, Jim Leisenring, Harry Evans, Paul Pacter, and Kay Stice. I am

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Harlow, Essex, U.K.: Pearson. 45 Exhibit I International Accounting Standards Board (original membership) Chairman: Sir David Tweedie – former chairman of Accounting Standards Board (UK) Vice chairman: Thomas E. Jones – former executive vice president, Citigroup (US) Mary E. Barth (part time) – accounting professor at Stanford University (US) Hans-Georg Bruns (liaison to German standard setter) – former chief accounting officer, DaimlerChrysler (Germany) Anthony T. Cope - former member of the Financial Accounting Standards Board (US) Robert P. Garnett – former executive vice president of finance, Anglo American plc (South Africa) Gilbert Gélard (liaison to French standard setter) – former partner of KPMG, Paris (France) Robert H. Herz (part time) – technical partner in PricewaterhouseCoopers, New York (US) James J. Leisenring (liaison to the FASB) – former vice chairman of the FASB (US) Warren McGregor (liaison to Australian and New Zealand standard setters) – former executive director of the Australian Accounting Research Foundation (Australia) Patricia O’Malley (liaison to the Canadian standard setter) – former full-time chairman of the Accounting Standards Board and previously technical partner of KPMG, Toronto (Canada) Harry K. Schmid – retired senior vice-president, Nestlé (Switzerland) Geoffrey Whittington (liaison to the UK standard setter) – retired accounting professor at Cambridge University and former member of Accounting Standards Board (UK) Tatsumi Yamada (liaison to the Japanese standard setter) – former partner of ChuoAoyama Audit Corporation (member of PwC), Tokyo (Japan) 46