Chapter 5

Environment of
International Research
 Learning Objectives

The international accounting environment

Global and domestic adoption of IFRS

IASB and its structure

The standard-setting process, including due

process
Utilizing e-IFRS
 International Environment

See Figures 5-1 and 5-2 for global and US

IFRS convergence efforts.
US milestones:

Norwalk Agreement

Memorandum of Understanding

SEC roadmap
 IASB

Role is to issue high-quality, enforceable, global

financial reporting standards
Several entities/procedures involved in standard
setting:
International Accounting Standards Committee
Foundation Constitution (The Constitution)
The Monitoring Board
International Accounting Standards Committee (IASC)
Foundation
Standards Advisory Council (SAC)
The Board itself
International Financial Reporting Interpretations
Committee (IFRIC)
 IASB Authorities

An introduction
Most IFRS contain the following:
Table of contents
Objective Actual standard

Scope List of voting

Definitions
IASB members
Basis for qualifying
or dissenting votes
Appendices
 IASB Due Process
Six stages
Input from working groups
Plan the research project

Develop and publish a discussion paper

Develop and publish an exposure draft

Draft an IFRS or publish a second exposure

draft
Hold meetings with constituents with respect
to implementation guidance
 IFRIC Due Process

IFRICs clarify IFRS or prevent diverging

viewpoints
Seven stage due process
Study to identify the issue
Agenda is set
IFRIC meetings and voting occurs
Draft interpretation is developed
IASB is consulted
Comment period allowed
Interpretation is approved by IFRIC and IASB
 Conceptual Framework

Establishes objectives and concepts for

development of accounting standards
Board uses framework for developing future
standards
Prepares and researchers use the framework
in the absence of published standards
Framework (objectives, assumptions,
qualitative characteristics, elements, capital
maintenance)
IFRS Funding and Regulation
Funding to the IASC Foundation is
voluntary
Local regulations govern the preparation
and issuance of financial statements
 IFRS Funding and Regulation
(contd.)
IASB does not have authority to require
compliance, however there are committees
that examine compliance with IFRS.
The EU ensure consistency through
Committee of European Securities Regulators
(CESR) and European Securities Committee
(ESC)
The SEC also examines cross-border
regulatory compliance
 IFRS Research
Hierarchy
All pronouncements have same authority,
but there is a hierarchy presented in IAS No.
8 that is useful to the researcher:
Apply specific IFRSs and if they do not apply, then
Apply other IFRSs that involve similar or related
issues
Apply the IFRS framework

Apply pronouncements of other standard setting

bodies.
 e-IFRS
Available in several languages
The IASC Foundation Constitution
The electronic
The Frameworkversion is a replica of the
bound manual
preface to released
IFRS by the IASB.
IFRSs IAS
IFRICS
SIC
Glossary
Due process handbook
for IASB and IFRIC
 Searching in e-IFRS

Glossary
Terms referenced to each standard and paragraph
number
Directly go to standard of interest by perusing
list
Advanced search function can be refined by:
Volume, standard, issue date, word stems, exact
phrases, and connectors.