Financial Reporting and Global Capital Markets: A History of the International Accounting Standards Committee, 1973-2000

Financial Reporting and Global Capital Markets: A History of the International Accounting Standards Committee, 1973-2000

Financial Reporting and Global Capital Markets: A History of the International Accounting Standards Committee, 1973-2000

Financial Reporting and Global Capital Markets: A History of the International Accounting Standards Committee, 1973-2000

Synopsis

Standardization and harmonization of accounting practices is a fundamental element of a global business environment. Achieving this is a complex process that involves technical and political negotiation. The International Accounting Standards Committee (IASC) was the organization that pioneered this process on a world-wide basis.

The IASC prepared the way for the International Accounting Standards Board (IASB) and its International Financial Reporting Standards, which since 2005 have held the dominant influence over the financial reporting of thousands of listed companies in the European Union, as well as in many other countries.

The forces and influences that shaped the formation of the IASB were intimately connected with the historical organization and operation of its predecessor, the IASC, and so to understand the standards enforced in financial reporting today, a historical understanding of the IASC is required. Financial Reporting and Global Capital Marketsdoes just this. It examines the history of the IASC from 1973 to 2000, including its foundation, operation, changing membership and leadership, achievements and setbacks, the development of its standards, and its restructuring leading up to the creation of the IASB in 2001.

The book also studies the impact of the IASC's standards on national standard setting and on accounting practice in developed and developing countries, as well as the impact on the IASC of the policies and positions of the UN, the OECD, the US Securities and Exchange Commission, the International Organization of Securities Commissions, and the European Commission. It will be of vital interest to all concerned with accounting developments in a global environment, be they academics, policy-makers, or professionals.

Excerpt

This book was conceived at IASC's farewell dinner in December 2000. Hans Burggraaff, a former chairman of IASC, announced that he thought that the history of the Committee should be written while so many of the participants in its success were still active and could be interviewed to give their perceptions of IASC's ambitions, and the difficulties it had faced in achieving them. We were very fortunate to find two such outstanding academics as Professors Kees Camfferman and Steve Zeff to undertake the tasks of sifting through IASC's records and interviewing so many of those involved with IASC, and, above all, of interpreting their research results in the light of the economic history of the time.

IASC, the brainchild of Lord Benson, will always have a secure place in the history of the globalization of the accounting profession. It grew out of the Accountants International Study Group, consisting of representatives of the British, Canadian, and US accountancy institutes—a group that was an early forerunner of the G4+1, which consisted of members and staff of the major standard setters of the 1990s (Australia, Canada, New Zealand, the United Kingdom, and the United States) and IASC staff.

All along, those responsible for the management of IASC shared a vision of a world in which a transaction would be accounted for in a similar manner no matter where it took place. Persuading others to support that objective was the role of IASC over the twenty-seven years of its existence.

From its modest beginnings as not much more than a collector of various existing best practices IASC developed into a body that determined which practice was to be regarded as the best and should become the world standard. In its later years it worked with the securities regulators to try to ensure that its standards would be accepted anywhere in the world without the need for reconciliation to the local jurisdiction's accepted practices or standards. Its final act was to decide the shape of its successor organization—the standard-setting IASB and its supervisory body of trustees. IASC approved its successor's constitution; and it appointed the nominating committee that in turn chose the IASC Foundation's trustees, who then selected the members of the new IASB. Several of those who served parttime on the Board of IASC became full-time members of the new IASB. These themes have been brought out clearly by those who were heavily involved in the debates of the time.

This book will be the definitive history of IASC from its inception to its transformation from a part-time to a full-time organization. Its readers will understand how the idealism and dedication of generations of professionals nurtured and sustained the vision of a single set of high-quality global standards and created, in the IASB, a means of achieving it. That vision has yet to be realized. But IASC lit a beacon on a path that the IASB is following—a path that I and my fellow Board . . .

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