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By Sabah Karimi, eHow Contributor
The International Accounting Standards Board is responsible for setting up, promoting and developing
the standards set up by the International Financial Reporting Standards board. The organization's
mission is to set accounting standards that best serve the public interest and create internationally-
acceptable guidelines for financial statement reporting.
History
1. The International Accounting Standards Board was launched in 2001 to replace the
International Accounting Standards Committee (IASC). The Board is responsible for
developing, implementing and monitoring the application of nationally and internationally-
approved accounting standards and working with the International Accounting Standards
Committee Foundation to shape the future of accounting.
Significance
2. The IASB is a privately-funded organization that assumed the responsibilities of setting
standards in accounting from the International Accounting Standards Committee in 2001. It is
an independent organization but is part of the International Accounting Standards Committee
Foundation that provides the framework for interpreting and overseeing the standards. The
standards are developed with a six-stage due process system that involves setting an
agenda, planning the project, developing and publishing discussion papers, exposure drafts
and standard documentation, and coordinating meetings after the standard is issued.
Function
3. The IASB is comprised of 14 Board members who are responsible for working on various
committees and drafting final interpretations and standards. All of the standards are
developed using an international consultation process which includes input and feedback from
the Standards Advisory Committee (SAC) and organizations from around the globe.
Features
4. The IASB works with the IASC Foundation Trustees to raise funds for the organization but is
solely responsible for managing and developing the International Financial Reporting
Standards (IFRS). The IFRS are the interpretations, processes, standards and procedures
that establish the general rules of accounting on a global scale. The International Financial
Reporting Standards are comprised of four components: all standards issued after 2001; the
International Accounting Standards (IAS) issued before 2001; the Interpretations from the
International Financial Reporting Interpretations Committee (IFRIC) after 2001; and the
Standing Interpretations Committee's standards issued before 2001. The IFRIC is responsible
for providing and developing the guiding principles for standard-setting and making sure that
all guidelines are followed consistently.
Benefits
5. The International Accounting Standards Board is supported by global committees and
councils to ensure consistency and convergence with accounting principles and process
around the globe. This makes it easier for different countries to maintain accurate accounting
records and share information globally without conflicting opinions or misinterpretations.
Monitoring the effects of the standards to manage unanticipated issues, or creating a
reinterpretation of a new standard also helps to maintain consistency and reduce potential
inaccuracies or misapplications of accounting rules.
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The tremendous increase of global financing activities has generated an increasing demand
for the development of international auditing standards for the performance of financial
audits. International standards on auditing (ISA) are issued by the International Federation of
Accountants (IFAC) through the International Auditing and Assurance Standards Board
(IAASB).
1.
Accountants play a central role to the success of a company.
The major purpose of the International Ethics Standards Board for Accountants, or IESBA, is
to develop ethical standards and guidance for professional accountants across the globe.
The IESBA, which is an independent standard-setting organization within the International
Federation of Accountants, or IFAC, formulates standards that enhance the Federation's
Code of Ethics for professional accountants in public and private practices and academia
throughout the world.
Code of Ethics
2. The IFAC Code of Ethics for Professional Accountants and Interpretations is used as
the foundation for codes of ethics developed by member bodies such as the Internal
Ethics Standards Board for Accountants. The essence of IESBA is to develop
standards, also known as pronouncements, through a rigorous process that includes
input from the general public. This is important because ethical accounting is central
to the stability and success of any organization. Many organizations fail because of
unethical accounting practices. In September 2008, for example, Lehman Brothers,
an American investment giant, collapsed. In March 2010, details of how Lehman
used accounting sleight of hand to hide bad investments were revealed in a 2,200-
paged document compiled by Anton R. Valukas, a court-appointed examiner. It is
this kind of unethical behavior that the IESBA aims to discourage.
Due Process
3. In order to establish feasible and acceptable standards, the IESBA has to take into
account the views of those affected by its standards and interpretations --
professional accountants. The body conducts research, consultation and consultation
debate. During the debate, a proposed standard or interpretation is presented as an
agenda paper for the discussion. The idea behind this is to establish the best
possible standards that serve companies, the public and economies.
Accountants Consultative Advisory Group
4. This is an organization under IESBA that comprises representatives of regulators
and business and international organizations interested in the development of
improved international ethical standards. After active consultation, the IESBA
receives valuable public input on its agenda, priorities and technical issues. The
IESBA consists of the chairman and 17 volunteer members who represent IFAC
member bodies, practitioners and others in public practice and others interested in
the work of the IESBA.
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1.
Internal auditors have to follow certain standards irrespective of where they work.
The Institute of Internal Auditors has certain international standards for the professional
practice of internal auditing. These standards provide a framework for internal auditors to
refer to in their job functions, irrespective of the environment in which they work. If there are
inconsistencies between the international standards and other standards, the auditor must
heed the international standards and only heed other standards if they are even more
restrictive than the IIA international standards.
Objectivity and Independence of Auditors
2. To perform their job duties without hindrance, the IIA international standards for
internal auditing state auditors should be independent in carrying out their duties.
The chief audit executive should report to a level in the organization that gives the
audit function true independence from outside interference in terms of determining
the scope of the internal audit, performing the audit and presenting a report on the
findings. As well, individual auditors should not be biased and should carry out their
duties in an objective fashion.
Professional Competence
3. Individual auditors should possess the skills and knowledge necessary to perform
their duties. Internal auditors should have sufficient knowledge to gauge the risk of
fraud and how the risk is managed by an organization. Also, they should be familiar
enough with information technology risks and controls and know how to use
technology-based audit techniques.
Internal auditors should apply reasonable prudence and care in performing their
duties. They should also engage in professional training to enhance their skills.
Quality Assurance
4. The IIA's international standards for professional practice of internal auditing also
require the chief audit executive to develop and maintain a quality assurance and
improvement program that includes both internal and external assessments of
internal auditing.
The internal audit involves an ongoing assessment of the audit activity and periodic
reviews of the activity. External assessesments of a firm's auditing function are
carried out once every five years by a qualified external reviewer or by a review team
from outside the organization. The chief audit executive must report to the company's
board and senior management on the results of the quality assurance and
improvement program.
Read more: International Standards for the Professional Practice of Internal Auditing |
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