What is the International Accounting Standards Committee (IASC)?

The International Accounting Standards Committee or IASC was an independent private-sector organization. The IASC aimed to achieve uniform accounting principles which businesses and organizations make use of for the purpose of financial reporting globally. It was replaced by the International Accounting Standards Board on 1 April 2001.

What Does the International Accounting Standards Committee Do?

In the International Accounting Standards Committee constitution, their stated goals include formulating and publishing in public interest accounting standards which would be noticed in the financial statement presentation an also to promote their global acceptance. The goals also extend to working to harmonize regulations, accounting standards, and processes related to financial statement presentation. This body was established in London, in the year 1973. As of 1998, it had got 143 accounting organizations that represented two million accountants in exactly 103 countries. This organization is not the first body, nationally or internationally, attempting to harmonize the accounting standards. Harmonization was studied by at the national level in 1942 by the English Institute of Chartered Accountants and in 1946 by the Committee on Accounting and Auditing Research of the Canadian Institute of Chartered Accountants. With sponsorship from professional accountants in Britain, America, and Canada, the Accountants International Study Group analyzed standardization from a global view and engaged in a comparison of the activities and procedures of the aforementioned countries. IASC members founded the International Federation of Accountants in 1977. This body has an alliance with IASC. In order to perfectly compare financial reports from country to country, standardized accounting procedures are needed. There is the likelihood of accounting procedures varying from country to country. The responsibility falls solely on companies transacting business in more than a country or investment services to harmonize various accounting procedures. This can be time-consuming and also really expensive. These accounting procedures are essential for multinational companies needing accounting procedures that are consistent for the purpose of examining operations from various countries. There must be harmony between the internal assessments of performance and foreign reports entering a multinationals headquarters. Since it is really expensive and difficult to establish national accounting standards, it is important for developing countries to have international accounting standards. In a world where global traders are in control, the importance of international accounting standards continues to increase. From 1991 to 1997, non-U.S. equity holdings of American investors skyrocketed from $200 billion to more than a trillion dollars. Almost 1,000 companies, out of the 13,000 that registered with the United States Securities and Exchange Commission (SEC), are foreign. European Union (EU) has closely associated itself with the IASC. One major objective of the EU has been to adopt a harmonized accounting procedure. There are groups and nations that are in support of IASC. They include the Arab Society for Certified Accountants. This society stands to represent 22 Arab countries. Next is Australia. In the 1990s, this country was working hard to harmonize its own accounting standards with that of IASC. This is similar to what Canada was working towards. Canada, the Malaysian Accounting Standards Board, and the South African Accounting Practices Board were all striving to achieve similar policies. Significant holdouts to adopting IASC standards are the U.K, Japan, and the U.S. United Kingdom prefer procedures stated by the U.K. Accounting Standards Board even though they are still attempting to get IASC harmonization. Japan is another notable holdout to the adoption as their government most times politicize the process and also set accounting standards. The United States is the third.In the U.S., private sectors set accounting standards in most cases. These accounting standards operate under accountant licensing laws that are state certified and also under the Securities and Exchange Commissions authority. It is under the consideration of the SEC to grant the use of IASC standards to issuers of foreign securities. At the moment, these issuers are to either undergo reconciling their financial statements to GAAP or make use of the United States GAAP. Employee benefits, deferred income taxes, and pension cost measurement are the items in need of reconciliation. Furthermore, IASC is trying to create standardized accounting procedures which would be reckoned with by the International Organization of Securities Commissions (IOSCO). This is a global association of securities commission which SEC is a member. Despite the agreement reached in 1993 by IASC and IOSCO on core standards, IASC standards endorsement has not been achieved. In a situation where IOSCO totally adopt the IASC standards, the Securities and Exchange Commission would most likely engage in an independent evaluation. These processes could extend up until the 21st century.