International_Accounting_Standards_Board

The IASB (International Accounting Standards Board) in London is an independent standard-setting board, appointed and overseen by a geographically and professionally diverse group of Trustees of the International Accounting Standards Committee (IASC) Foundation who are accountable to the public interest (12/17/09 http://www.hedgefundsreview.com). IASB co-operates with national accounting board to set standards to harmonize accounting standard around the world. Thus the primary objective of the Board to bring in practice the best accounting and auditing policies to manage the financial of the world at large. The IAS Board comprises 15 members from nine different countries appointed by the Trustees of IASC Foundation. The members are appointed as per guidelines detailed in IASC Foundation Constitution. IASC Foundation is committed to develop, in the public interest and through its standard-setting body, the International Accounting Standards Board (IASB), a single set of high quality, international financial reporting standards for general purpose financial statements. The governance of the IASC Foundation rests with 22 Trustees who are individuals with senior executive experience from diverse geographical and professional backgrounds, in both the private and public sectors domain. IASC works as an independent not-for-profit organization. IFRSs are developed through an international consultation process. This Due Process brings together interested individuals and organizations from around the world. The due process comprises six stages, with the Trustees having the opportunity to ensure compliance at various points throughout: 1. Setting the Agenda - To set an agenda the staffs are asked to identify, review and raise issues that requires IASB attention. 2. Planning the project - Once agenda is set ISAB decide whether to undertake the project alone or involve another standard setter/s from around the world. A technical team is also appointed & selected for the project 3. Developing and publishing the discussion paper - Publishing discussion paper is not mandatory but IASB publishes about the new topic to explain the issue and get early comment from citizens. The paper includes overview of the issue, alternatives to approach the issue, authors view and an invitation to comment on the topic. 4. Developing and publishing the exposure draft - Taking suggestion from staff and project team IASB publishes the exposure draft to take comments from the public. 5. Developing and publishing the standard - Comment in previous steps are discussed and after reviewing the comments, a new updated exposure draft is published if IASB meeting decide to republish to get comments. Thus after all the above steps are completed and outstanding issues resolves IASB member ballot on the IFRS in favor of its publication then new IFRS is issued. A brief technical summary of recent standard issued by IAS is herein given below. IFRS 8 Operating Segments Core principle -An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. This IFRS shall apply to: (a) the separate or individual financial statements of an entity: (i) whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or (ii) that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organization for the purpose of issuing any class of instruments in a public market; and (b) the consolidated financial statements of a group with a parent: (i) whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or (ii) that files, or is in the process of filing, the consolidated financial statements with a securities commission or other regulatory organization for the purpose of issuing any class of instruments in a public market. This IFRS also requires an entity to give descriptive information about the way the operating segments were determined, the products and services provided by the segments, differences between the measurements used in reporting segment information and those used in the entity's financial statements, and changes in the measurement of segment amounts from period to period. IFRS 4 Insurance Contracts The objective of this IFRS is to specify the financial reporting for insurance contracts by any entity that issues such contracts (described in this IFRS as an insurer) until the Board completes the second phase of its project on insurance contracts. The IFRS permits an insurer to change its accounting policies for insurance contracts only if, as a result, its financial statements present information that is more relevant and no less reliable, or more reliable and no less relevant. In particular, an insurer cannot introduce any of the following practices, although it may continue using accounting policies that involve them: (a) measuring insurance liabilities on an undiscounted basis. (b) measuring contractual rights to future investment management fees at an amount that exceeds their fair value as implied by a comparison with current fees charged by other market participants for similar services. (c) using non-uniform accounting policies for the insurance liabilities of subsidiaries. The IFRS permits the introduction of an accounting policy that involves re-measuring designated insurance liabilities consistently in each period to reflect current market interest rates (and, if the insurer so elects, other current estimates and assumptions). Without this permission, an insurer would have been required to apply the change in accounting policies consistently to all similar liabilities (3/20/07 http://www.iasb.org). The IFRS requires disclosure to help users understand: (a) the amounts in the insurer's financial statements that arise from insurance contracts. (b) the nature and extent of risks arising from insurance contracts. To get more information one may contact IASC Foundation at First Floor 30 Cannon Street London, EC4M 6XH United Kingdom Phone: +44 (0)20 7246 6410 Fax: +44 (0)20 7246 6411