This video discusses the structure and role of the International Accounting Standards Board (IASB). The IASB, which is based in London, was formed in 2001 to create a single set of global accounting standards. The IASB periodically issues International Financial Reporting Standards which have been adopted as Generally Accepted Accounting Principles (GAAP) by more than one hundred countries. IASB board members are selected by IFRS Foundation Trustees. The IASB is supported by the IFRS Advisory Council and the IFRS Interpretations Committee. The advisory council provides guidance to the IASB and the Interpretations Committee aims to reduce divergent accounting practices by clarifying the appropriate accounting treatment with the existing IFRS.

The International Standards Board (IASB) is a private organization that creates international accounting standards.  The IASB was formed in 2001 with the goal of creating a single set of global accounting standards.  The IASB is based in London and has more than a dozen board members who come from different parts of the world.  The IASB periodically issues International Financial Reporting Standards (IFRS) which have been adopted by more than one hundred countries.  The IASB does not have the power to force countries to follow IFRS—it is up to each country to decide.  The United States, for example, does not follow IFRS and follows the standards created by a different organization called the Financial Accounting Standards Board (FASB).  The IFRS are considered to be more principles-based (and therefore less complex) than the standards issued by the FASB.

The board members of the IASB are selected by the IFRS Foundation Trustees.  The IASB is supported by the IFRS Advisory Council and the IFRS Interpretations Committee (IFRIC).  The advisory council provides guidance to the IASB and the Interpretations Committee aims to reduce divergent accounting practices by clarifying the appropriate accounting treatment with the existing IFRS.

Prior to the creation of the IASB in 2001, the International Accounting Standards Committee (IASC) issued International Accounting Standards (IAS).  The people who ran the IASC worked part-time and were supported by a small support staff and a group of volunteers, so the IASB was created with full-time board members and a larger support staff.  The IAS that were issued by the IASC are still considered authoritative, but the most authoritative standards are the IFRS.

If you are exhausted from trying to keep track of all these different acronyms, then congratulations—you are perfectly normal.  There are many acronyms in accounting and no one can keep track of them all.  Some people even create acronyms to keep track of all the acronyms, which is like buying a piece of cake to distract you from the cookies that are sitting on your kitchen counter.  The bottom line information you need to understand is that:

1.  There is an international accounting standard-setter called the IASB

2.  Most countries follow the rules created by the IASB, but not all (e.g., the U.S.)

3.  It would be great if one day all countries adopted international accounting standards because that would make the financial statements issued by firms from different countries more comparable

4.  Buying cake to distract you from cookies is not going to improve your health