IFRS IN INDIA

How are IFRS Formulated

Introduction
Home We all know IFRS implementation is only a few months away and is
Resources going to change the way our financial reporting is done. Shouldn’t we
IFRS Resources
know who and how IFRS are developed, issued and implemented? This
article attempts at understanding the organization structure of IASB and
IAS Board
how the Standards are developed, issued and implemented.
Indian AS Resources
Understanding of IASB due processes would enable us to contribute in
XBRL the convergence with IFRS and protect local interests. IASC
Foundation actively encourages every participating country / region to
put across its views and makes active efforts to ensure there views are
reflected in its documents.

 
Origin of ‘International Accounting Standards’
‘IASC Foundation Constitution’ is the basic document from which
emanates the process of developing and implementing ‘global
accounting standards’. The constitution was approved in its original
form by the Board of the former IASC in 2000. Present form of the
constitution was after the last amendment in January 2009.
 
The International Accounting Standards Committee (IASC)
Foundation formed in 2001, as an independent not-for-profit, private
sector organization, is committed to developing, in the public interest
and through its standard-setting body, the International
Accounting Standards Board (IASB), a single set of high
quality, international financial reporting standards for general purpose
financial statements.
 
Organization structure of IASB
Constitution provides for the following bodies to be set-up and lays
down there functions:
 International Accounting standards committee Foundation
(IASCF)
  Monitoring Board
 International Accounting standards Board (IASB)
 International Financial Reporting Interpretations Committee
(IFRIC)
 Standards Advisory Council (SAC)
 
International Accounting standards committee Foundation (IASCF)
The governance of ‘IASC foundation rests with 22 trustees; individuals
with senior executive experience drawn from diverse geographical and
professional backgrounds from both public and private sectors.
Trustees are appointed for a renwable period of 3 years; 6 trustees are
appointed from Asia / Oceanic region, 6 from Europe, 6 from North
America and 4 from any region.
The objectives of IASCF are:

 To develop, in the public interest, a single set of high quality,

understandable and enforceable global accounting standards
that require high quality, transparent and comparable
information in financial statements and other financial reporting
to help participants in the world’s capital markets and other
users make economic decisions;
 To promote the use and rigorous application of those standards;
 
Monitoring Board
The constitution requires setting up of a ‘Monitoring Board’, which
provide a formal link between IASC Foundation trustees and Public
authorities. The link seeks to replicate the link between accounting
standard setters and public authorities who have overseen accounting
standard setters.
The responsibilities of Monitoring Board are:
 Participate in the process of appointing trustees to IASCF and
approve there appointment
 Review and provide advise to trustees on fulfillment of there
responsbilties
The monitoring board comprises relevant leaders from Emerging
Markets and Technical Committees of the International Organization
of Securities Commission (IOSCO), the European Commission, the
Japan Financial Services Agency (FSA), and the US Securities and
Exchange Commission (SEC). The Basel Committee on Banking
Supervision will sit as a formal observer at Monitoring Board
meetings.  
 
International Accounting standards Board (IASB)
IASB is the independent standard setting board, appointed and
overseen by IASC and, supported by external advisor council (SAC)
and interpretations comitte (IFRIC). IASB works with national
accounting standard setters for achiving convergence around the world.
The trustees of IASCF shall appoint 16 members to IASB drawn from
various regions of the world in order to ensure a broad international
basis.
IASB shall:
 Have complete responsibility for all IASB technical matters
including the preparation and issuing of International
Accounting Standards, International Financial Reporting
standards and exposure drafts.
 Publish an exposure draft on all projects and normally publish a
discussion document for public comment on major projects;
 Have full discretion in developing and pursuing the technical
agenda of the IASB and over project assignments on technical
matters:
 
International Financial Reporting Interpretations Committee (IFRIC)
The International Financial Reporting Interpretations Committee
(IFRIC) shall comprise fourteen voting members, appointed by the
Trustees. The Committee shall interpret the application of International
Accounting Standards (IASs) and International Financial Reporting
Standards (IFRSs) and provide timely guidance on financial reporting
issues not specifically addressed in IASs and IFRSs, in the context of
the IASB Framework, and undertake other tasks at the request of the
IASB.
 
Standards Advisory Council (SAC)
The constitution requires establishment of Standards Advisory Council
(SAC), whose members are appointed by IASCF, which provides a
forum for participation by organizations and individuals, with an
interest in international financial reporting, having diverse
geographical and functional backgrounds. The functions of SAC are
 Advice to the IASB on agenda decisions and priorities in the
IASB’s work;
 Informing the IASB of the views of the organisations and
individuals on the Council on major standard-setting projects
and
 
 
Process of Developing Standards
 
International Financial Reporting Standards (IFRSs) are developed
through an international consultation process, the "due process”,
which involves interested individuals and organizations from around
the world.
 
The “due process” has six stages to ensure compliance at various points
throughout:
 Setting the agenda
 Planning the project
 Developing and publishing the discussion paper
 Developing and publishing the exposure drat
 Developing and publishing the standard
 After the standard is issued
 
 
The IASB evaluates the merits of adding a potential item to its agenda
mainly by reference to the needs of investors. The IASB considers:
 the relevance to users of the information and the reliability of
information that could be provided
 existing guidance available
 the possibility of increasing convergence
 the quality of the standard to be developed
 resource constraints.
 
IASB normally publishes a discussion paper as its first publication on
any major new topic to explain the issue and solicit
early comment from constituents. Typically, a discussion paper
includes:
 a comprehensive overview of the issue;
 possible approaches in addressing the issue;
 the preliminary views of its authors or the IASB; and
 an invitation to comment.
 
Publication of Exposure draft is the IASB’s main vehicle for consulting
the public and is mandatory step in due process. 
 
The development of an IFRS is carried out during IASB
meetings, when the IASB considers the comments
received on the exposure draft. After all due processes
are completed and all outstanding issues are resolved
and, the IASB members have balloted in favour of the
publication, an IFRS is issued.
 
After an IFRS is issued, the staff and the IASB members hold regular
meetings with interested parties, including other standard-setting
bodies, to help understand unanticipated issues related to the practical
implementation and potential impact of its proposals. Those studies
may result in items being added to the IASB’s agenda.
 
Enter supporting content here

Information is Power. Let us make information on

IFRS avalaible to all stakeholders.
ksrirama@rediffmail.com