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Essay on International Accounting Standards
The Making of an International Accounting Standard
The IASC board sets up a steering committee to start the process of originating a new International Accounting Standard (IAS) with majority support by the board. The steering committee, headed by a board member, writes a Statement of Intent, which is disseminated to various accounting organizations for comment. After review of the comments and any appropriate revision to the Statement of Intent, it is disseminated again for comment and review. This iterative process continues until closure is reached. The Statement of Intent progresses to the next step of Exposure Draft with two-thirds vote of approval by the board. The iterative process of circulation to interested parties, review of responses, and resubmission of a revised draft continues until the draft is ready for presentation to the board. If approved by a three-quarters vote by the board, the Exposure Draft becomes a new International Accounting Standard.
This process can be seen in greater detail by observing the 1991 status of an important Statement of Intent on the IASC's agenda, the "Comparability of Financial Statements." The board had approved its general objectives by majority vote and a steering committee had discussed its proposed content with other standard-setting bodies, stock exchanges, and business and professional accounting organizations in Australia, Canada, France, Italy, Japan, Korea, the Netherlands, the Philippines, South Africa, Sweden, the United Kingdom, the United States, and Zimbabwe. Moreover, discussions with the European Commission, the OECD Working Group on Accounting Standards, the United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting, the International Organization of Financial Executives Institutes, the Council of the International Federation of Accountants, the Federation des Experts Compatibles Europeans, and the Interamerican Accounting Association had already taken place. Seven hundred and fifty pages of responses from the consultations with various organizations in over thirty countries, bound in two volumes, had been made available to interested parties............
