IASB The need for the single set
IASB is the International accounting standards-setting Body “responsible for developing single set of high-quality global accounting standards, known as IFRS Standards.” (www.
ifrs.org/about-us/, accessed 12/12/2017). These standards are a set of principles that companies have to follow when prepare financial statements. Prepared standardise reports describe companies performance and are legally binding for all listed companies and financial institutions. IASB as well as being standards developer, also provides assistants and guidance to the companies on the use of standards, and deals with the issues which are not covered by the standards.
Trough IFRS standards IASB brings transparency, accountability and efficiency to financial market around the world. During past 10 years formed a tendency for the use of global single set accounting standards to be developed in preference to national standards. Although National Standards enjoy an advantage of:· Familiarity· Reflection on national issues, economy and law, rather than irrelevant matters · Close link to national system of taxationThe need for the single set of International Accounting Standards (IAS and now IFRS) clearly outweighs the preference to national, which include:· Single sets of standards provides greater comparability of financial reporting with other countries, as well within the country between listed companies that might use at the moment different standards· High quality of financial reporting globally, rather than use of national GAAP’s· Better understanding, interpretation and transparency of accounts by users· A single framework means reduced complexity of documentation for investors, financiers, Stock exchange users· Easier education and training of accountants.The G20 and major international financial players support the idea of single set of global accounting standards. The modern economies develop beyond the country borders and rely heavily on the cross-border transactions and the free flow of the international capital. Investors seek opportunities around the world, the companies’ organisational structures combines international branches in multiple countries.
Application of national accounting standards meant that different countries calculate and report the financial statements differently. The national standards often add cost, complexity and risk to the users of financial statement, since investors have to study national accounting standards in order to read and understand the financial statement with the view to make a decision.