International Accounting Standards Board

Members

The IASB originally had 14 full-time Board members, each with one vote. They are selected as a group of experts with a mix of experience of standard-setting, preparing and using accounts, market/financial regulation and academic work as well as from diverse geographical backgrounds. At their January 2009 meeting, the Trustees of the Foundation concluded the first part of the second Constitution Review, announcing the creation of a Monitoring Board and the expansion of the IASB to 16 members and giving more consideration to the geographical composition of the IASB. After the Trustees’ Review of Structure and Effectiveness in 2015, the number of members were in 2016 again set to 14 members.

The IFRS Interpretations Committee has 15 members. It is the IASB's interpretative body and its brief is to provide timely guidance on application issues that arise in practice.

A unanimous vote is not necessary in order for the publication of a Standard, exposure draft, or final "IFRIC" Interpretation. The Board's 2016 Constitution states that the publication of an Exposure Draft, or an IFRS Standard (including an IAS Standard or an IFRIC Interpretation of the Interpretations Committee) shall require approval by eight members of the Board, if there are 13 members or fewer, or by nine members if there are 14 members. Other decisions of the Board, including the publication of a Discussion Paper, shall require a simple majority of the members of the Board present at a meeting that is attended by at least 60 per cent of the members of the Board, in person or by telecommunications.

To ensure broad international balance, the IASB membership is typically structured geographically with four members each from Asia-Oceania, Europe, and the Americas, one from Africa, and one at large, subject to maintaining overall balance.

As of March 2021, the members included:

• Andreas Barckow (Chair), Germany
• Sue Lloyd (Vice-chair)
• Nick Anderson, UK, Janus Henderson Investor
• Tadeu Cendon, Brazil
• Zach Gast, US
• Jianqiao Lu, China
• Bruce Mackenzie, South Africa
• Bertrand Perrin, France
• Tom Scott, Canada
• Rika Suzuki, Japan
• Ann Tarca, Australia
• Mary Tokar, US

Former IASB members include James J. Leisenring, Robert P. Garnett (formerly Anglo American PLC), Mary Barth, David Tweedie, Gilbert Gélard, Warren McGregor, and Tatsumi Yamada (formerly PriceWaterhouseCoopers and KPMG).

List of IASB chairs

• David Tweedie (April 2001-June 2011)
• Hans Hoogervorst (July 2011-June 2021)
• Andreas Barckow (July 2021-present)

Due process

The Trustees of the IFRS Foundation have a Due Process Oversight Committee that is responsible for monitoring compliance with due process. The IASB Due Process Handbook describes the consultative arrangements of the IASB, and includes information on how standards are developed.

Research

In accordance with Section 37(a) of the IFRS Constitution, the Board exercises full discretion over its technical agenda, utilizing the research programme to analyze reporting problems and collect evidence on potential improvements (DP Handbook Para. 4.11), while also addressing broader issues to foster international debate on the evolution of financial reporting (DP Handbook Para. 4.10). To facilitate decision-making on the technical work plan, the Board publishes balloted Discussion Papers representing its collective views, as well as Research Papers or Requests for Information, approved by a simple majority, to gather evidence and public feedback on specific financial reporting issues before proceeding to a mandatory Exposure Draft. (DP Handbook Paras. 4.12–4.16).

Proposals

After a project is formally added to the agenda by a simple majority vote (DP Handbook s. 5.6), the Board debates technical proposals in public meetings while consulting with mandatory advisory bodies like ASAF (IFRS Constitution s. 37(b); DP Handbook s. 3.53, 5.2). The Board may establish optional consultative groups for major projects (DP Handbook s. 3.58) before reaching a technical agreement and summarizing the due process steps taken (DP Handbook s. 6.4, 6.6). This phase concludes with the mandatory publication of an Exposure Draft, which requires a supermajority ballot and is supported by public outreach activities (IFRS Constitution s. 36; DP Handbook s. 6.16).

Finalisation

Following the comment period for an Exposure Draft, the Board is mandated to consider all feedback received to determine redeliberation priorities or whether to discontinue the project (IFRS Constitution s. 37(f); DP Handbook s. 6.19). The Board must formally assess the need for re-exposure if fundamental changes are made (DP Handbook s. 6.25) and may optionally issue a "review draft" to allow for a final "fatal flaw" check before balloting. Once the DPOC is informed of the intent to proceed, the final Standard is issued via a supermajority ballot and must be accompanied by a Basis for Conclusions and a feedback statement (IFRS Constitution s. 36; DP Handbook s. 6.37–6.38).

Review

The Board must conduct a mandatory Post-implementation Review for each new Standard or major amendment, typically commencing two to three years after implementation, to assess its practical effect and determine if further standard-setting is required (DP Handbook s. 6.48, 6.52).

Endorsement process

The IFRS accounting standards are developed by the International Accounting Standards Board (IASB). To ensure appropriate political oversight, the regulation introduces a mechanism to assess the IFRSs and the related interpretations adopted by the London-based International Accounting Standards Board (IASB) (part of the IFRS Foundation) in order to give them enforceability within the EU. A new standard issued by the IASB requires formal endorsement by the EU before it can be applied. The IAS Regulation (EC) No 1606/2002 sets out a specific endorsement procedure managed by the European Commission, in conjunction with its consultative and advisory bodies (EFRAG/ARC). The endorsement process involves the European Financial Reporting Advisory Group (EFRAG), which provides independent expert advice to the Commission, and the Accounting Regulatory Committee (ARC), which is composed of representatives of EU countries and chaired by the European Commission. The EU's IFRS endorsement process begins with the IASB adopting a new standard or amendment, which is then technically assessed by EFRAG, formally approved by the Accounting Regulatory Committee (ARC), scrutinized by the European Parliament and Council, and finally made law by the European Commission through an adopting regulation. Every time a new standard is endorsed at the EU level, the Commission publishes an amending regulation, ensuring the new IFRS rules are directly applicable across all EU countries.

Funding

The IFRS Foundation raises funds for the operation of the IASB. The majority of the funding is voluntary contributions from jurisdictions that have put in place national financing regimes. The contribution is normally a percentage of the total gross domestic product of all contributing jurisdictions. Additionally, part of the contributions comes from the biggest accounting firms. In 2019, IFRS Foundation's revenue amounted to GBP 31 million, of which GBP 20 million came from contributions and GBP 11 million came from self generated revenue from publications and related activities.

Conceptual Framework

The Conceptual Framework for Financial Reporting is a practical tool issued by the IASB that describes the objective of, and the concepts for, general purpose financial reporting. The current version was issued in March 2018.

Purpose

The primary purposes of the Framework are:

• To assist the IASB in developing IFRS Standards that are based on consistent concepts.
• To assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction.
• To assist all parties to understand and interpret the Standards.

Qualitative characteristics

The Framework identifies the qualities that make financial information useful. These are divided into Fundamental and Enhancing characteristics.

Useful Financial Information = Relevance + Faithful Representation

• Relevance: Information is relevant if it is capable of making a difference in the decisions made by users.
• Faithful Representation: Information must represent the economic phenomena it purports to represent.

The Elements of Financial Statements

The Framework defines the "building blocks" of the financial statements. The definitions focus on economic resources and claims.

The Balance Sheet Equation

The relationship between assets, liabilities, and equity is the fundamental identity of accounting:

Equity = Σ Assets − Σ Liabilities

• Asset: A present economic resource controlled by the entity as a result of past events.
• Liability: A present obligation of the entity to transfer an economic resource as a result of past events.

The Performance Equation

The result of an entity's operations is measured by the change in net assets, excluding contributions from or distributions to equity holders:

Profit (or Loss) = Σ Income − Σ Expenses

• Income: Increases in assets, or decreases in liabilities, that result in increases in equity (other than contributions).
• Expenses: Decreases in assets, or increases in liabilities, that result in decreases in equity (other than distributions).

Recognition Criteria

An item is recognized in the financial statements if it meets the definition of an element and its recognition provides users with:

1. Relevant information about the element.
2. A faithful representation of that element.

Measurement Bases

The Framework describes two primary measurement categories:

1. Historical Cost: Measurement based on the transaction price at the date of acquisition.
2. Current Value: Including Fair Value, Value in Use, and Current Cost.

Fair Value = Exit Price (Market-based price to sell an asset or transfer a liability)