IASB stands for the International Accounting Standards Board, which is linked with the IFRS that stands for International Financial Reporting Standards. The IASB is not only 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 as a way of replacing the IASC that was the International Accounting Standards Committee.
It has a total of 14 members who deal with the technical matters that are linked to the development or revision of the financial statements. It focuses on dealing with issues that are either not focused 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 in order to benefit once economy.
There are several advantages that 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 that which country actually needs their investment.
As the International Financial Reporting Standards use the philosophy that is merely based on principles thus it gives off a picture to the general public that represents equality and transparency in terms of the financial statements of different businesses and organizations.
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 as 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 means that it would help people carrying 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 that are 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 come up with 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 any other people to open up their companies or invest in companies that are in different regions and follow different laws and regulations.