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International Accounting Standards Committee (IASC) Definition
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.
A Little More on What is the International Accounting Standards Committee
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 multinational’s 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 Commission’s 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.
References for International Accounting Standards Committee
Academic Research on International Accounting Standards Committee
• An investigation into the influence of cultural factors in the international lobbying of the International Accounting Standards Committee: the case of E32, Comparability …, MacArthur, J. B. (1996). The international Journal of accounting, 31(2), 213-237. This article analyzes how cultural factors influence the global lobbying of the International Accounting Standards Committee. It examines the corporate comment letters sent on the IASC’s draft 32 and then showing how cultural factors influenced it. The uncertainty avoidance and femininity-masculinity hypotheses were partly supported by content analyses results. The same results were consistent with the hypotheses on power distance and individualism. For the aspect of accounting subcultural values, there was strong support, as well as, weak support. Strong support was discovered for the Nordic company and Anglo company hypotheses. The only evidence of weak support was the Germanic company hypothesis, as well as, the hypothesis of more developed Latin companies.
(No) limits to Anglo-American accounting? Reconstructing the history of the International Accounting Standards Committee: A review article, Botzem, S., & Quack, S. (2009). Accounting, Organizations and Society, 34(8), 988-998. This article reviews the reconstruction of IASC’s history. Many challenges of international financial reporting are revealed by the recent development of the International Accounting Standards Board (IASB). One of them is the standard of international accounting. Scholarly research works on financial reporting and also global capital markets are reviewed in the article. After creating a seminal piece, an Anglo-American angle is adopted by the authors. The downsides include insufficiencies in relation to an easy comprehension of experts and expertise, neglecting the role performed by auditing firms, and an imbalanced joining of various stakeholders.
Survival strategies of a global organization: The case of the International Accounting Standards Committee, Wallace, R. O. (1990). Accounting Horizons, 4(2), 1. This article explores the survival techniques utilized by global organizations. The International Accounting Standards Committee serves as a case study.
Corporate lobbying of the international accounting standards committee, Larson, R. K. (1997). Journal of international financial management & accounting, 8(3), 175-203. This work examines corporate lobbying in relation to the international accounting standards committee. This research paper was worked for the purpose of comprehending the features of corporations which lobby IASC. Also, it was done to carry out an empirical test on how applicable the lobbying theories of the U.S. would be in the international setting. An analysis was carried out on comment letters submitted by corporations about Exposure Drafts and Draft Statements of Position. In all, the 100 lobbying corporations were really large. In the United States alongside ten of the twelve countries analyzed, the lobbying corporations were more than the non-lobbying firms in matters of income, assets, and revenue.
The impact of cultural factors on the lobbying of the International Accounting Standards Committee on E32, comparability of financial statements: An extension of …, MacArthur, J. B. (1999). Journal of international accounting, auditing and taxation, 8(2), 315-335. This article examines the effects of culture on IASC lobbying based on the comment letters forwarded by accounting member bodies. It is an extended and advanced research on previous work as it explores corporate lobbying on E32. This work also investigates matters related to economic consequence. Based on the results generated from this research, it is concluded that culture, accounting sub-culture and economic factors affect the accounting preferences of corporate management and accounting member bodies.
Lobbying of the International Accounting Standards Committee: The case of construction contracts, Larson, R. K., & Brown, K. L. (2001). Advances in International Accounting, 14, 47-73. This article examines IASC lobbying with reference to construction contracts.
• An Interview with Sir Bryan Carsberg, Secretary-General of the International Accounting Standards Committee, Schweikart, J. A., Gray, S. J., & Salter, S. B. (1996). Accounting Horizons, 10(1), 110. This is based on an interview with the Secretary-General of the IASC, Sir Bryan Carsberg. There have been suggested impediments to IASC’s efforts to harmonize the international accounting standards. The suggested impediments include political, economic, cultural, and several other environmental factors. Investigations are carried out on the relationship existing between the position of lobbyists and the financial accounting standards of their home countries. Also, the relationship between their position and the tax rules of their home countries is investigated.
Financial Reporting and Global Capital Markets: A History of the International Accounting Standards Committee, 1973-2000, Saudagaran, S. M. (2008). This article analyzes global capital markets and financial reporting. It reviews the history of the IASC from 1973 to 2000.
The International Accounting Standards Committee: a Progress Report, Sharpe, M. (1999). Journal of International Financial Management & Accounting, 10(1), 71-79. A progress report on the IASC is explored in this article.
Lobbying and the international accounting standards committee, Kirsch, R. J., & Day, R. (2001). This article evaluates the IASC and lobbying. The theories used were agency theory and systems theory with reference to the years of Core Standards Program which was between 1993 and 1998. In order to lobby the International Accounting Standards Committee, form, as well as, informal channels were deployed by external parties. IASC is a body that has worked with local and international organizations, some of which are the International Organization of Securities Commissions (IOSCO), the Canadian Institute of Chartered Accountants (CICA), the Accounting Standards Board (ASB), and the Financial Accounting Standards Boards (FASB).
Review of Financial Reporting and Global Capital Markets: A History of the International Accounting Standards Committee, 1973–2000, Richardson, A. J. (2008). Accounting Perspectives, 7(2), 173-180. This is a review of the financial reports and global capital markets.