Analyzing the Objectives and Goals of the International Accounting Standards Committee (IASC)

Posted In | Finance | Accounting Software

The International Accounting Standards Committee (IASC) was established in 1973 to develop a single set of high-quality, global accounting standards that would bring transparency, consistency, and efficiency to financial reporting. Since its inception, the IASC has played a crucial role in promoting the adoption and implementation of International Financial Reporting Standards (IFRS). This article aims to analyze the objectives and goals of the IASC, which have shaped the development of international accounting standards over the past few decades.

 

 

1. To Develop a Single Set of High-Quality Global Accounting Standards

The primary objective of the IASC is to develop a single set of high-quality, global accounting standards that require transparent and comparable information in financial statements. This is achieved through the development and promotion of the IFRS, which are designed to be applicable to the financial reporting of all entities, regardless of their size or the nature of their operations. The IASC aims to ensure that these standards are based on clearly articulated principles and are consistently applied across jurisdictions.

 

2. To Promote the Use and Application of These Standards

Another key objective of the IASC is to promote the use and application of its accounting standards globally. This involves encouraging the adoption of IFRS by national regulators, standard-setters, and other stakeholders, as well as providing support to jurisdictions in their implementation efforts. The IASC also works closely with other international organizations, such as the International Organization of Securities Commissions (IOSCO) and the World Bank, to facilitate the adoption and consistent application of IFRS around the world.

 

3. To Take Account of the Needs of Emerging Economies and Small and Medium-Sized Entities (SMEs)

The IASC recognizes the importance of considering the needs of emerging economies and SMEs in the development of its accounting standards. To this end, the IASC has developed a separate set of accounting standards for SMEs, known as the IFRS for SMEs. This simplified version of the full IFRS is designed to meet the financial reporting needs of smaller entities, while still maintaining the overall quality and consistency of the standards. Additionally, the IASC continues to engage with stakeholders from emerging economies to ensure that their specific needs and concerns are addressed in the standard-setting process.

 

4. To Contribute to the Development of a Single Global Capital Market

One of the long-term goals of the IASC is to contribute to the development of a single global capital market by promoting the adoption and consistent application of its accounting standards. By providing a common framework for financial reporting, the IFRS can help to reduce the barriers to cross-border investment and facilitate the flow of capital between countries. This, in turn, can lead to increased economic growth and prosperity for all market participants.

 

The objectives and goals of the International Accounting Standards Committee have played a significant role in shaping the development of global accounting standards over the past few decades. By working towards a single set of high-quality, global accounting standards and promoting their adoption and consistent application, the IASC has contributed to greater transparency, consistency, and efficiency in financial reporting. This has not only benefited the users of financial statements but has also played a crucial role in fostering the development of a single global capital market.