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

Topics: International Financial Reporting Standards, Financial Accounting Standards Board, International Accounting Standards Board Pages: 51 (19261 words) Published: March 22, 2012
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 1

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 solely responsible for what remains. 2 Most of the factual matter in this article supporting the discussion of the IASC period, from 1973 to 2000, has been drawn from Camfferman and Zeff (2007). In places where the reader might wish to consult the fuller coverage in the book, including relevant citations, I will insert (CZ 2007) and the page or chapter numbers. Chapter 1 of the book contains a 12-page overview of the evolution of the IASC.


more difficult to acquire historical perspective on very recent events and developments, but also because the IASB has received much more attention by a wider audience in recent years. The evolution of the IASC and the IASB is the tale of a private-sector international accounting standard setter which has succeeded in earning the respect and support initially of national accounting bodies, then of national standard setters, and ultimately of regulators in the major capital markets and of government ministries, as well as of the preparers and users of financial statements around the world. Some of its success has been due to good timing: it was the only competent international accounting standard setter in the late 1990s when the European Union (EU) was bent on creating an internal capital market and the European Commission was seeking an alternative to U.S. GAAP as the source of required accounting standards for the EU’s listed companies in that market. The European Commission’s surprise proposal in 2000 to commit EU listed companies to adopt International Accounting Standards by 2005 caught the world’s attention, and other countries began taking the IASC seriously as the world’s accounting standard setter. With this acceptance of its standards, the IASB (as the IASC came to be known in 2001) entered a high-stakes game in which companies and governments became proactive players, and regulators took a seat at the table. II.BACKGROUND TO THE FOUNDING OF THE IASC Following World War II, each country had its own Generally...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Role and Evolution of Iasb
  • Iasb Essay
  • Essay on iasb
  • IASB and FASB Essay
  • challenge that teenagers face Research Paper
  • Secret challenges nurses face Essay
  • Globalization Challenges Face by Managers Essay
  • Challenges That Face Multiracial Latinos Essay

Become a StudyMode Member

Sign Up - It's Free