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Information that Is Included on this Page
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The Old Structure: 1973-2000
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The International Accounting Standards Committee (IASC) was formed in 1973 through an agreement made by professional accountancy bodies from Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland, and the United States of America. Additional sponsoring members were added in subsequent years, and in 1982 the sponsoring "members" of the IASC comprised all of the professional accountancy bodies that were members of the International Federation of Accountants (IFAC).
Accounting standards were set by a part-time, volunteer IASC Board that had 13 country members and up to 3 additional organisational members. Each member was generally represented by two "representatives" and one "technical advisor". The individuals came from a wide range of backgrounds – accounting practice, business (particularly multinational businesses), financial analysis, accounting education, and national accounting standard-setting. The Board also had a number of observer members (including representatives of IOSCO, FASB, and the European Commission) who participated in the debate but did not vote.
Major components of the old IASC structure were:
- IASC Board – described above.
- Consultative Group – an advisory body representing a wide range of international organisations with an interest in accounting.
- Standing Interpretations Committee (SIC) – developed and invited public comment on interpretations of IASC Standards, subject to final approval by the IASC Board.
- Advisory Council – oversight body (despite its name, the Advisory Council functioned more like the Board of Trustees of the new IASC Foundation, described below).
- Steering Committees – expert task forces for individual agenda projects.
The International Accounting Standards Committee was essentially the structure, rather than a committee in the traditional sense of a group of people.
Click for More Information:
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The New Structure: Background and Chronology
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After nearly 25 years of achievement, IASC concluded in 1997 that to continue to perform its role effectively, it must find a way to bring about convergence between national accounting standards and practices and high-quality global accounting standards. To do that, IASC saw a need to change its structure. In late 1997 IASC formed a Strategy Working Party to re-examine its structure and strategy. (Jacques Manardo, Deloitte Touche Tohmatsu Global Managing Partner-Strategic Clients, was a member of that group.)
The Strategy Working Party published its Report, in the form of a Discussion Paper, in December 1998. After soliciting comments, the Working Party published its Final Recommendations in November 1999.
The IASC Board approved the proposals unanimously in December 1999, and the IASC member bodies did the same in May 2000. A new IASB Constitution took effect 1 July 2000. The standards-setting body was renamed the International Accounting Standards Board (IASB). It would operate under a new International Accounting Standards Committee Foundation (IASCF).
On 1 April 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards.
In June 2005, the Trustees of the IASC Foundation completed their 2003-2005 Constitution Review and approved a broad range of Changes to the Constitution that went into effect on 1 July 2005. This web page reflects those changes.
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Overview of the Restructured IASB
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The IASB is organised under an independent Foundation named the International Accounting Standards Committee Foundation (IASCF). That Foundation is a not-for-profit corporation created under the laws of the State of Delaware, United States of America, on 8 March 2001. Components of the new structure:
- International Accounting Standards Board – has sole responsibility for establishing International Financial Reporting Standards (IFRSs).
- IASC Foundation – oversees the work of the IASB, the structure, and strategy, and has fundraising responsibility.
- International Financial Reporting Interpretations Committee (IFRIC) – develops interpretations for approval by the IASB.
- Standards Advisory Council (SAC) – advises the IASB and the IASCF.
- Working Groups – expert task forces for individual agenda projects.
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Diagram of the Current IASB Structure (Clickable in MS Internet Explorer)
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Trustees of the IASC Foundation
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The following reflects revisions to the IASC Foundation Constitution that were approved by the Trustees in June 2005, effective 1 July 2005:
Number of trustees. 22 Trustees. (Initially, the IASC Foundation Board of Trustees had 19 Trustees.)
Geographical balance of trustees.
- Six from North America.
- Six from Europe.
- Six from the Asia/Oceania region
- Four from any area, subject to establishing overall geographical balance.
Backgrounds of trustees. The constitution requires an appropriate balance of professional backgrounds, including auditors, preparers, users, academics, and other officials serving the public interest. Two will normally be senior partners of prominent international accounting firms.
Selection of trustees. Trustees are appointed by the Board of Trustees itself (self-perpetuating board). Trustees adopt their own procedures for appointing trustees. Those procedures must include consultation with national and international organisations of auditors (including IFAC), preparers, users, and academics and public solicitation of nominees including self-nominations. To achieve this objective, the trustees have established a Trustee Appointments Advisory Group. The trustees will consult that body before making decisions on trustee appointments.
Responsibilities of the Trustees. The Trustees of the IASC Foundation have responsibility to:
- appoint the members of the Board, including those who will serve in liaison capacities with national standard setters, and establish their contracts of service and performance criteria;
- appoint the members of the Standing Interpretations Committee and the Standards Advisory Council;
- review annually the strategy of IASB and its effectiveness;
- approve annually the budget of IASB and determine the basis for funding;
- review broad strategic issues affecting accounting standards, promote IASB and its work and promote the objective of rigorous application of International Accounting Standards, provided that the Trustees shall be excluded from involvement in technical matters relating to accounting standards;
- establish and amend operating procedures for the Board, the Standing Interpretations Committee and the Standards Advisory Council;
- approve amendments to this Constitution after following a due process, including consultation with the Standards Advisory Council and publication of an Exposure Draft for public comment.
Trustee voting. The Trustees act by simple majority vote except for amendments to the Constitution, which require a three-fourths majority.
Initial Trustees. The initial Trustees were chosen in 2000 by a Nominating Committee. Click here for a List of Members of the Nominating Committee.
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International Accounting Standards Board
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IASB's responsibilities. The principal responsibilities of the IASB are to:
- Develop and issue International Financial Reporting Standards and Exposure Drafts, and
- Approve Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC).
Number of Board members. 14 members, of whom 12 serve full-time and two part-time.
Main qualifications for IASB members. "Professional competence and practical experience". More specific criteria as detailed in the annex to IASC Foundation Constitution:
- Demonstrated technical competency and knowledge of financial accounting and reporting.
- Ability to analyse.
- Communication skills.
- Judicious decision-making.
- Awareness of the financial reporting environment.
- Ability to work in a collegial atmosphere.
- Integrity, objectivity, and discipline.
- Commitment to the IASC Foundation's mission and public interest.
Geographical mix of IASB members. "Trustees shall ensure that the IASB is not dominated by any particular constituency or geographical interest".
Background mix of IASB members. "Appropriate mix of recent practical experience among auditors, preparers, users and academics".
Due process steps. Formal due process for projects normally, but not necessarily, involves the following steps. The steps that are required by the IASC Foundation Constitution are indicated by an asterisk*:
- ask the staff to identify and review the issues associated with the topic and to consider the application of the Framework to the issues;
- study national accounting requirements and practice and exchange views about the issues with national standard-setters;
- consult the Standards Advisory Council about the advisability of adding the topic to the IASB's agenda;*
- form an advisory group (generally called a 'working group') to advise the IASB and its staff on the project;
- publish for public comment a discussion document;
- publish for public comment an exposure draft approved by vote of at least nine IASB members, including any dissenting opinions held by IASB members (in exposure drafts, dissenting opinions are referred to as 'alternative views');*
- publish within an exposure draft a basis for conclusions;
- consider all comments received within the comment period on discussion documents and exposure drafts;*
- consider the desirability of holding a public hearing and the desirability of conducting field tests and, if considered desirable, holding such hearings and conducting such tests;
- approve a standard by at least votes of at least nine IASB members and include in the published standard any dissenting opinions;* and
- publish within a standard a basis for conclusions, explaining, among other things, the steps in the IASB's due process and how the IASB dealt with public comments on the exposure draft.
The IASB is required to explain its reasons if it decides not to follow any of the non-mandatory due process steps. Such non-mandatory steps are:
- Publishing a discussion document before an exposure draft.
- Forming working groups.
- Publishing a basis for conclusions.
- Holding public hearings.
- Conducting field tests.
In March 2006, the Trustees of the IASCF published a new Due Process Handbook for the IASB. The Handbook describes the IASB's consultative procedures. Click for Press Release (PDF 57k). Click here to download the Due Process Handbook (PDF 463k).
IASB agenda. The IASB has full discretion over developing and pursuing its technical agenda. The trustees' annual review of the strategy of the IASC Foundation and the IASB and its effectiveness includes "consideration, but not determination, of the IASB's agenda".
IASB voting. The publication of a Standard, Exposure Draft, or final SIC Interpretation requires approval by 9 of the Board's 14 members. (From the IASB's inception in 2001 to 30 June 2005, the required vote was 8 out of 14.) Click here for a History of Voting Requirements of IASC and IASB for Final Standards.
IASB working groups. The Board will normally form Working Groups or other types of specialist advisory groups to give advice on major projects. The IASCF Trustees' Procedures Committee reviews the proposed composition of each group to ensure that there is a satisfactory balance of perspectives. Click for More Information about Working Groups.
IASB Chairman. Appointed by the Trustees. In late June 2000, the Trustees announced the appointment of Sir David Tweedie as the first Chairman of the restructured IASB. Sir David continues today as IASB Chairman.
Board meetings. The new IASB held its first official meeting in London in April 2001. The Board meets monthly (except August) for approximately one week. Board meetings are normally held at the IASB's office in London. Twice each year, the IASB and the US Financial Accounting Standards Board (FASB) hold a joint meeting (usually April and October). The April meeting is normally held at the FASB's office in the Unted States.
More information about the Board. Click for:
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Standards Advisory Council
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SAC role. The Standards Advisory Council (SAC) provides a forum for participation by organisations and individuals, with an interest in international financial reporting, having diverse geographical and functional backgrounds, with the objective of:
- advising the IASB on agenda decisions and priorities in the IASB's work,
- informing the IASB of the views of the organisations and individuals on the Council on major standard-setting projects,
and
- giving other advice to the IASB or the Trustees.
SAC members. Under the IASC Foundation Constitution, SAC has 30 or more members. The number is currently around 40. Members are appointed by the Trustees for a renewable term of three years. They have diverse geographic and functional backgrounds.
SAC chairman. SAC has an independent chairman appointed by the Trustees.
SAC meetings. The SAC normally meets three times each year at meetings open to the public.
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International Financial Reporting Interpretations Committee
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The International Financial Reporting Interpretations Committee (until 2002 known as the Standing Interpretations Committee) has 14 members* appointed by the Trustees for terms of three years. IFRIC members are not salaried but their expenses are reimbursed. IFRIC meets approximately every other month at meetings that are open to public observation. Approval of Draft or final Interpretations requires that not more than three voting members vote against the Draft or final Interpretation. IFRIC is chaired by a non-voting chair who can be one of the members of the IASB, the Director of Technical Activities, or a member of the IASB's senior technical staff.
IFRIC's Responsibilities:
- Interpret the application of International Financial Reporting Standards (IFRSs) and provide timely guidance on financial reporting issues not specifically addressed in IFRSs or IASs, in the context of the IASB's framework, and undertake other tasks at the request of the Board.
- Publish Draft Interpretations for public comment and consider comments made within a reasonable period before finalising an Interpretation.
- Report to the Board and obtain Board approval for final Interpretations.
IFRIC Members:
*In November 2007, the IASC Foundation Trustees voted to enlarge IFRIC to 14 members from its original 12 members.
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IASC Foundation Constitution
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Current Constitution
Brief History
- On 24 May 2000, the first IASC Foundation Constitution was approved by the Members of IASC. (Members of the IASC were the professional accounting organisations that were also IFAC members).
- On 5 March 2002, certain paragraphs were revised by the Trustees of the IASC Foundation, effective on that date. Those revisions were necessary to implement certain aspects of the IASB's Preface to IFRS relating to the Standing Interpretations Committee.
- In November 2003, the trustees of the IASC Foundation announced the appointment of a committee to Review the IASB's Constitution.
- On 21 June 2005, the Trustees of the IASC Foundation gave final approval to a broad range of changes to the Constitution, effective 1 July 2005. Information about the changes may be found Here.
- On 31 October 2007, the Trustees of the IASC Foundation revised the Constitution to reflect the expansion of IFRIC to 14 members, effective immediately.
- At their 31 October 2007 meeting, the Trustees Announced (PDF 55k) that a comprehensive Constitution Review would be undertaken in 2008.
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Key Groups
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Certain groups have been closely involved with the development of IASC Standards during the 1990s as participating observers at every IASC Board meeting and nearly all IASC steering committee meetings. Those groups continue to be closely involved with the work of the IASB. They are:
Because they are important to the success of the IASB, we have provided separate pages of information about the involvement of these key groups with IASB.
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IASC Board Statement December 2000
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At its December 2000 meeting, the IASC Board approved a statement to be transmitted to the new International Accounting Standards Board. The Statement comments on current work in progress and expresses some of Board's current thinking based on its work on these items and other discussions. The Board expressed a hope that its successor would continue work on the projects on:
- business combinations,
- present value,
- reporting financial performance,
- insurance,
- extractive industries, and
- financial instruments.
In addition, the Statement suggests the following new projects:
- a project on convergence of national and international standards,
- a new 'improvements project' to deal with relatively minor matters in the existing IASC Standards,
- share-based payment,
- intangible assets,
- narrative reporting outside the notes,
- update the Framework and Preface to IAS,
- special version of IAS for small enterprises, and
- review of IAS provisions relating to inflation accounting.
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