The Regulatory Framework

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1 Introduction

In this chapter we will look briefly at the regulatory system that exists for financial accounting, and the role of International Financial Reporting Standards.

2 The purpose of International Financial Reporting Standards (previously called International Accounting Standards).

In a perfect world, all accounts would be prepared according to the same ‘set of rules’.

In practice each country has its own standards, and the purpose of International Financial Standards is ,as far as possible, to develop a single set of standards worldwide.

IFRS’s do not have the force of law, but most countries have changed their rules to be consistent with the IFRS’s.

3 The International Financial Reporting Standards Foundation

This is the supervisory body, and their objectives are to develop a set of accounting

standards and to promote their use throughout the world.

4 The International Accounting Standards Board (IASB)

It is the IASB that is actually responsible for issuing the IFRS’s.

5 The IFRS Advisory Council (IAC)

This body consults with a wide range of interested parties and gives advice to the

IASB.

6 The International Financial Reporting Interpretations Committee (IFRIC)

IFRIC issues guidance on the interpretation of IFRS’s.

7 Exposure Drafts

An exposure draft is a proposed IFRS which is published for public comment. After all the comments have been considered, and revisions made where appropriate, the final version of the IFRS is published.

8 The Conceptual Framework

This is not an accounting standard, but was issued by the IASB setting out the concepts underlying the preparation and presentation of financial statements.

IFRS’s are developed within this framework.