International Accounting Standards Board (IASB)
IASB stands for the International Accounting Standards Board, which is linked with the IFRS that stands for International Financial Reporting Standards.
IASB stands for the International Accounting Standards Board, linked with the IFRS that stands for International Financial Reporting Standards. The IASB is an independent body, but it is a private sector that deals mainly with different accounting aspects under the jurisdiction of the International Financial Reporting Standards.
It was formed way back in 2001 to replace the IASC that was the International Accounting Standards Committee.
It has 14 members who deal with the technical matters linked to the development or revision of the financial statements. It focuses on dealing with either not focused on within the IFRS or are not dealt with by the accounting standards.
Benefits of IFRS and IASB
International Financial Reporting Standards (IFRS) reports are published by the International Accounting Standards Board (IASB), which then becomes a global set of accounting standards that are then followed across the globe to benefit once economy.
Several advantages are linked to the adoption of the International Accounting Standard Boards' rules and regulations. Some of them are mentioned below:
It allows comparison at the global level as almost 150 countries follow the set of accounting standards mentioned under the International Financial Reporting Standards (IFRS).
Thus the comparability of the financial statements belonging to different countries can be achieved easily as the same set of rules and regulations are applied. It also enables people to point out the negatives and positives of different companies that new companies can avoid in the future.
Investors can get a clear picture regarding different companies that operate at a global level; thus, it would help them determine which country actually needs their investment.
As the International Financial Reporting Standards use the philosophy that is merely based on principles, it gives off a picture to the general public that represents equality and transparency in terms of different businesses and organizations' financial statements.
The information cannot be manipulated as it a very transparent image of the transactions that have been made by a particular business. Thus the information provided is highly relevant and accurate compared to the accounting standards that are followed by countries on an independent basis.
It also enhances cross-border transactions and investments as similar accounting standards are being used globally, which would help people carry out their trade activities easily.
The foreign investors would know that the accounting standards that are being followed are the same; hence they would be more encouraged to invest in the business.
The accounting standards under the IFRS are more accurate and cannot be manipulated; thus, the investors know that they are playing a safe game in terms of investment. The confidence of different stakeholders at the global level is also enhanced and increased.
Drawbacks that are linked to the IFRS and IASB
However, there are a few drawbacks that can be linked to the International Financial Reporting Standards. The main problem is that every country differs in terms of the laws applied in the region.
Every country has different tax laws and rules and regulations at the local level. Thus every entity or organization might have to prepare or develop the financial statements for their local laws that are different from the accounting standards followed globally.
Hence, this might create a problem for investors or other people to open up their companies or invest in companies in different regions and follow different laws and regulations.
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