International Accounting Standards Board

The International Accounting Standards Board (IASB) is the independent, not-for-profit organization that develops and maintains IFRS — the accounting standards used by public companies in over 140 countries. The IASB is the global equivalent of the US FASB. It is funded by contributions from governments, companies, and regulators to ensure independence. The IASB works with national regulators, auditors, and companies to develop standards that facilitate international comparability of financial statements.

The role and mission of the IASB

The IASB was established to develop a single set of high-quality, understandable accounting standards that can be used globally. This vision emerged from the need for comparability: as businesses went global, investors needed a common financial language.

Unlike the SEC, which enforces standards in the US, the IASB has no enforcement power. Enforcement is the responsibility of national regulators in each country using IFRS. The IASB’s role is to develop standards and to coordinate with national bodies to ensure consistent application.

Governance and independence

The IASB operates under the oversight of the IFRS Foundation Trustees, which ensures independence and governance. The Trustees are drawn from different countries and sectors, representing a global constituency.

Funding comes from contributions by governments, central banks, companies, auditing firms, and international organizations. This diverse funding model is intended to prevent any single entity from controlling the standard-setter.

The IASB has 14 members, including the chair. Members are selected based on technical expertise and geographic balance. They serve full-time and are expected to provide independent judgment, not represent their home countries.

How standards are developed

The IASB’s process is similar to the FASB’s:

1. Research Phase — the IASB identifies an issue and studies it.
2. Discussion Paper — a preliminary exposure of options and reasoning.
3. Exposure Draft — a proposed IFRS standard, released for public comment (usually 120 days).
4. Redeliberation — the IASB reviews feedback and discusses revisions.
5. Final IFRS — the standard is published, with an effective date.

The IASB aims for extensive due process and global input. Public hearings are held on major projects, and feedback is considered from all stakeholders.

Major IFRS standards

The IASB has issued 18 core standards (IFRS 1–18) and numerous interpretations. Key standards include:

• IFRS 15 — Revenue from Contracts with Customers (converged with ASC 606).
• IFRS 16 — Leases (converged with ASC 842).
• IFRS 9 — Financial Instruments (similar to ASC 326 on credit losses).
• IFRS 3 — Business Combinations (similar to ASC 805).
• IAS 2 — Inventories (does not permit LIFO; requires FIFO or weighted average).
• IAS 16 — Property, Plant, and Equipment (permits revaluation; GAAP generally requires historical cost).

Each standard is principle-based, giving companies judgment in application based on economic substance.

IFRS and convergence with GAAP

For 15 years, the IASB and FASB worked on convergence. Revenue (IFRS 15/ASC 606) and leases (IFRS 16/ASC 842) are now fully converged. Other areas remain distinct.

The SEC has not mandated IFRS for US public companies, despite past discussions. Instead, the SEC permits foreign companies to file using IFRS and permits some IFRS reconciliation in other filings. GAAP remains the US standard.

The IASB continues to monitor areas where GAAP and IFRS diverge and considers convergence where conceptually justified.

Sustainability and non-financial reporting

In recent years, the IASB’s scope has expanded. It established the ISSB (International Sustainability Standards Board) to develop standards for climate, environmental, and social disclosure. This brings the IASB into broader corporate reporting, alongside its traditional financial accounting role.

The ISSB has issued standards on climate-related disclosures and is developing standards on other sustainability topics.

The IASB and the future

The IASB is the de facto global accounting standard-setter. As long as capital is international and businesses are global, a common accounting language will be needed. The IASB’s challenge is to stay relevant, to adapt to emerging issues (crypto, intangibles, climate), and to balance principles-based flexibility with enough guidance to ensure consistent application.

See also