International Accounting Standards

An older set of standards stating how particular types of transactions and other events should be reflected in financial

statements. In the past, international accounting standards (IAS) were issued by the Board of the International Accounting

Standards Committee (IASC). Since 2001, the new set of standards has been known as the

international financial reporting standards (IFRS) and has been issued by the International Accounting Standards Board (IASB)

International Accounting Standards Survey 2000

David Cairns a popular name in the area of international financial reporting in United

Kingdom IAS survey 2000 is the second IAS survey prepared by David Cairne.

This survey is a significantly expanded and updated survey of 165 listed companies that

referred to IAS’s in their 1999 financial statements.

For each company the 2000 survey identifies :• The level of compliance with IAS’s.• The way in which new IAS’s have been applied.• The approach adopted by its auditors.• The implications of any USGAAP disclosures. This survey also identifies that the accounting

standards domestic, IAS’s or USGAAP-adopted by FTSE Eurotop Companies and European Companies listed on EASDAQ.

IAS AROUND THE WORLD The economic and financial crises

which began in 1998 in certain Asian countries and spread to other regions of the world showed the need of reliable and transparent accounting and financial reporting to support sound decision making by investors and regulating authorities.

Need of HIGH QUALITY IAS’s

High quality accounting standards are critical to the development of a high quality global financial reporting structure.

High quality accounting standards consist of a comprehensive set of neutral principles that require consistent, comparable, relevant and reliable information that is useful for investors, lenders and creditors, and others who make capital allocation decisions.

High quality accounting standards are essential to the efficient functioning of a market economy because decisions about the allocation of capital rely heavily on credible and understandable financial information.

For International Standards to gain acceptance, these must meet three key objectives : 1) Standard should include a core set of accounting pronouncements that constitute a

comprehensive generally accepted basis of accounting.2) Standard must be of ‘high quality’ they must result in comparability and transparency

and they must provide for full disclosures.3) Standard must be rigorously interpreted and applied.

The Institute of management accountants believe that developing high quality standards is as much a function of having the right process as it is

having the right context. The characteristics of high quality standard establish the vision or the

ultimate goal of standard setting characteristics can be discussed under two parts :

1) CONTENT

2) PROCESS

1) Standards should be written in a clear, understandable manner, and their principle should be operational to apply.

Make use of existing information. Base the standards upon concepts. Ensure that the benefits arise from the principles of a new standard exceeds

the possible costs. Provide operational transition requirements. Accept pragmatic decisions on accounting and disclosure requirements.2) Standards should provide recognition and measurement guidance that

seeks to replicate economics of the underlying transaction or event.3) Disclosure should be limited to those that contribute significantly to

financial statements users understanding of the enterprise’s financial performances.

PROCESS1) In the absence of compelling evidence of a pervasive problem new standards

should be limited to the areas for which there are no existing standards.2) The development of new standards should include rigorous frequent

participation by task forces, and subjected to well designed and executed field tests before they are finalised.

3) The development of new standards should include the consideration of accounting standards in other countries and seek to leverage opportunities for furthering international harmonisation where it is feasible without compromising the quality of US standard.

4) Standards derived in response to new issues or events should constitute a measured response that rationally considers the importance and pervasiveness of the problem.

5) If appropriate standards should provide for a sunset review of all or portion of the proposed guidance at a future date.

6) Standards setting project should have realistic goals for deliverables and they should be completed on timely basis.

The US committee on corporate reporting (CCR) of the Financial Executives Institute

takes in to consideration following framework principles :

should based upon developed principles and concepts. Should produce financial information which is more relevant and

meaningful. Should prevent or minimize the perceived deficiency. Degree of flexibility Clear and concise statement Standard of high quality are those in which a follow up procedure

has been included or at least performed. Are made with full cooperation of approaches.