Briefly describe the International Accounting Standards Board (IASB) and who can use IFRS in the United States?

Answer 1

The International Accounting Standards Board (IASB) is an independent accounting standard-setting entity with 14 voting members from a number of countries. Standards set by the IASB are International Financial Reporting Standards (IFRS). The IASB also has a conceptual framework that is similar to the FASB's conceptual framework and that is used for similar purposes. The IASB began operating in 2001; the standards set by its predecessor body, the International Accounting Standards Committee (IASC) are called International Accounting Standards (IAS), and IFRS includes them. Over 100 countries require or permit firms incorporated under the laws of those countries to use IFRS, or standards based on IFRS, to prepare their financial reports or have announced plans to do so. Each of these countries has its own regulatory arrangements for enforcing the proper application of IFRS in that jurisdiction; these arrangements differ considerably across countries. As a result, different firms subject to IFRS do not necessarily account for the same transaction using the same set of rules.

In 2007 the U.S. SEC adopted new rules that permit non-U.S. firms that list and trade their securities in the United States (non-U.S. SEC registrants) to apply IFRS in their financial reports filed with the SEC without any reconciliation to U.S. GAAP. Prior to this rule change, non-U.S. SEC registrants could apply any financial reporting system to prepare their financial reports, but they had to reconcile those reported numbers to the numbers that they would have reported had they prepared the financial statements using U.S. GAAP. The main effect of this 2007 rule change is to create two sets of acceptable financial reporting systems in the United States, specifically, U.S. GAAP for U.S. SEC registrants and IFRS for non-U.S. SEC registrants.