History of Accounting Standards: By:Gholamhossein Davani Nysscpa, Iacpa, Iia, Cfe, Eaa, Ima, Aia

History of Accounting
Standards
By:Gholamhossein Davani
NYSSCPA,IACPA,IIA,CFE,EAA,IMA,AIA
Managing Partner f Dayarayan Auditing &
Financial Services Firm( RSM member in Iran)
1
 Accounting has been called the language of business and accounting
standards are grammar of this language. we must have a solid
grounding in its fundamentals. Accounting information has been
useful for hundreds of years. The double-entry framework was first
described in a book written by Luca Pacioli, a fifteenth-century Italian
monk and mathematician, although its origins can be traced back
another 300 years. The formal structure for processing financial
transactions is at least 700 years old.
 What is the definition of accounting? Accounting is the process of
providing quantitative information about economic entities to aid
users in making decisions concerning the allocation of economic
resources.
 The term accounting theory is commonly used, but it has no unified,
standardized definition. Very closely related to the realm of
accounting theory is the area of measurement. Measurement is
concerned with the process of assigning numbers to the attributes or
characteristics of the elements being measured.
 In addition to accounting, accountancy has emerged as a profession,
alongside the professions of medicine and law.
2
Specific accounting policies
concerning particular topics
or industries, providing
descriptions of acceptable
methods of treating elements
of accounting.
"If globalization is a fact, no single
organization can resolve all the
problems alone,"
3
Who have responsibility for
Accounting Standards
 International Accounting Standards Board
 Financial Accounting Standards Board
 Accounting Standards Board
 List of FASB Pronouncements
 Chinese accounting standards
 Governmental Accounting Standards Board
 International Accounting Standards Committee
 Australian Accounting Standards Board
 Standard accounting practice
 Federal Accounting Standards Advisory Board
 Generally Accepted Accounting Principles (United States)
 Hong Kong Accounting Standards
 International Financial Reporting Standards
 International Public Sector Accounting Standards
 Accounting Standards Review Board
 Accounting Principles Board
 Generally Accepted Accounting Principles (Canada) 4
Who issues standards?
International Accounting Standards (IASs) were issued by the

IASC from 1973 to 2000. The IASB replaced the IASC in 2001.
Since then, the IASB has amended some IASs and has proposed to
amend others, has replaced some IASs with new International
Financial Reporting Standards (IFRSs), and has adopted or
proposed certain new IFRSs on topics for which there was no
previous IAS. Through committees, both the IASC and the IASB
also have issued Interpretations of Standards. Financial
statements may not be described as complying with IFRSs unless
they comply with all of the requirements of each applicable
standard and each applicable interpretation.
5
Accountancy Age timeline:
1969 - 2004
 1969: Accountancy Age is launched.
 DTI inquiry into Robert Maxwell's Pergamon Press causes its
takeover by LeaseCo to fall apart.
 Touche, Ross, Bailey & Smart becomes Touche Ross
 1970: ICAEW's proposal to merge with ICAS, ICAI and other
bodies fails
 1973: Henry Benson appointed first chairman of the International
Accounting Standards Committee
 1974: The Consultative Committee of Accountancy Bodies (CCAB)
is formed
 1977: IFAC is founded
 1979: Ernst and Whinney is formed
 1980: ACCA's Vera di Palma becomes the first female president of
an international accounting body
 1984: Merger of Deloitte, Haskins & Sells and Price Waterhouse
falls through
6
 1987: Peat Marwick International and KMG merger forms KPMG
 1989: Arthur Andersen/Price Waterhouse merger collapses in September.
 Ernst & Young is formed from Ernst & Whinney and Arthur Young. Touche
Ross and Deloitte Haskins Sells merge to form Deloitte & Touche
 1990: The 'Guinness Four' are found guilty of fraud
 1991: Robert Maxwell drowns. BCCI collapses. Polly Peck and Coloroll
scandals lead to Ian Cadbury's report on good corporate governance
 1995: Deloitte & Touche creates Deloitte Consulting. Barings collapses
 1996: Ian and Kevin Maxwell cleared of fraud, Coopers & Lybrand's audits
of Maxwell companies face JDS investigation. KPMG produces the first
annual report by an accountancy firm, which reveals senior partner Colin
Sharman earns a total package of £740,000
 1998: Coopers & Lybrand and Price Waterhouse form
PricewaterhouseCoopers.
 JDS turns the spotlight on Arthur Andersen in connection with the £50m
overstatement of profits by Wickes
7
 2000: European Commission announces in July that it intends to make IAS
mandatory from 2005.
 The IASC completes its three-year restructuring programme and creates
the International Accounting Standards Board, effective from April 2001.
 Ernst & Young sells consulting arm to Cap Gemini
 2001: SEC's Enron investigation begins. Big Five issue a joint statement in
December insisting that self-regulation remains the best policy following
the collapse of Enron
 2002: Andersen's Houston office admits to shredding documents relating
to Enron. WorldCom is accused of $4bn fraud, which drags Andersen into
another scandal. Andersen UK acquired by Deloitte. SEC implements
Sarbanes-Oxley
 2003: Grant Thornton is dragged into €4bn accounting 'black hole' at
Parmalat.
 Deloitte & Touche rebrands as simply 'Deloitte'.
 Higgs and Smith reports take an evolutionary step on from Cadbury and
Turnbull
 2004: The Financial Reporting Council is revamped. Inland Revenue
merges with Customs & Excise.
 Listed companies in the UK were required to present their financial statements
using the international accounting standards adopted by the EU for periods
commencing on or after 1 January 2005.
8
Who Sets Accounting
Standards in UK?
 The role of the Accounting Standards Board (ASB) is to issue accounting standards. It
is recognized for that purpose under the Companies Act 1985. It took over the task of
setting accounting standards from the Accounting Standards Committee (ASC) in
1990.
 The ASB also collaborates with accounting standard-setters from other countries and
the International Accounting Standards Board (IASB) both in order to influence the
development of international standards and in order to ensure that its standards are
developed with due regard to international developments.
 Accounting standards developed by the ASB are contained in 'Financial Reporting
Standards' (FRSs). Soon after it started its activities, the ASB adopted the standards
issued by the ASC, so that they also fall within the legal definition of accounting
standards. These are designated 'Statements of Standard Accounting Practice'
(SSAPs). Whilst some of the SSAPs have been superseded by FRSs, some remain in
force.
 Accounting standards apply to all companies, and other kinds of entities that prepare
accounts that are intended to provide a true and fair view. The
Foreword to Accounting Standards explains the authority, scope and application of
accounting standards.
9
Who Sets Accounting
Standards in USA?
The following institutes work together to create new and

amend older standards in order to establish and maintain a
common language for communicating financial information:
1-The Financial Accounting Standards Board (FASB),

2-American Institute of Certified Public Accountants (AICPA),
3-Securities and Exchange Commission (SEC),
4-International Accounting Standards Board (IASB)
5-The passage of the Sarbanes-Oxley Act and the creation of
the Public Company Accounting Oversight Board (PCAOB)
signals many significant forthcoming changes in GAAP and
the current standards setting process.
10
Who Sets Accounting
Standards in EU?
At a joint meeting in September 2002, the International Accounting Standards Board (IASB) and the
Financial Accounting Standards Board (FASB) agreed to work together to develop high quality, fully
compatible financial reporting standards that could be used for domestic and cross-border
reporting; this co-operative effort is sometimes described as international convergence of US GAAP
and IFRS financial reporting standards. The IASB-FASB convergence effort involves two kinds of
projects. The first type includes short-term projects that are intended to remove many of the
numerous individual differences between International Financial Reporting Standards (IFRS, which
include International Accounting Standards (IAS) issued by the predecessor body to the IASB) and
US GAAP. Examples of current and proposed short-term convergence efforts involve the accounting
treatments of no monetary exchanges, discontinued operations, income taxes and interim reporting.
The second type of convergence project involves longer term joint IASB-FASB projects and
coordinated projects that are intended to provide major pieces of improved accounting guidance.
Examples of the latter include the joint projects on revenue recognition and purchase method
procedures and the coordinated project on share-based payments. The goal of the IASB-FASB
convergence efforts is to make US GAAP and IFRS financial reporting standards as nearly as possible
the same across jurisdictions while also improving the overall quality of those standards.
The convergence activities of the IASB and the FASB will of necessity be directly and indirectly
affected by regulatory changes and shifts in economic conditions throughout the world. The purpose
of this paper is to identify some possible implications for international convergence of a particularly
significant regulatory change, namely, the mandated adoption of IFRS by listed enterprises in the
European Union beginning in 2005. This change will increase the number of enterprises that apply
IFRS to prepare their consolidated reports from several hundred to several thousand, and will
require the use of IFRS by enterprises that vary considerably in size, ownership structure, capital
structure, political jurisdiction and financial reporting sophistication. The purpose of this discussion
paper is to explore several implications of this major shift in financial reporting requirements for the
overall international convergence of financial reporting standards and practices.
11
IASB Framework
While not a standard, the IASB Framework for the
Preparation and Presentation of Financial Statements
serves as a guide to resolving accounting issues that are not
addressed directly in a standard. Moreover, in the absence
of a standard or an interpretation that specifically applies to
a transaction, IAS 8 requires that an entity must use its
judgment in developing and applying an accounting policy
that results in information that is relevant and reliable. In
making that judgment, IAS 8.11 requires management to
consider the definitions, recognition criteria and
measurement concepts for assets, liabilities, income, and
expenses in the Framework. The IASB adopted the
Framework in April 2001. It had originally been adopted by
the IASC in 1989. Currently, the IASB is working on a
Project to Revise the Framework.
12
What is IFRSs’
The term International Financial Reporting Standards
(IFRSs) has both a narrow and a broad meaning. Narrowly,
IFRSs refers to the new numbered series of pronouncements
that the IASB is issuing, as distinct from the International
Accounting Standards (IASs) series issued by its
predecessor. More broadly, IFRSs refers to the entire body of
IASB pronouncements, including standards and interpretations approved by

the IASB and IASs and SIC interpretations approved by the predecessor
International Accounting Standards Committee. On this website,
consistent with IASB policy, we abbreviate International Financial
Reporting Standards (plural) as IFRSs and International Accounting
Standards (plural) as IASs.]
13
IFRS
 International Financial Reporting Standards Preface to

International Financial Reporting Standards
 IFRS 1 First-time Adoption of International Financial Reporting
Standards
 IFRS 2 Share-based Payment
 IFRS 3 Business Combinations
 IFRS 4 Insurance Contracts
 IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations
 IFRS 6 Exploration for and Evaluation of Mineral Assets
 IFRS 7 Financial Instruments: Disclosures
 IFRS 8 Operating Segments Framework for the Preparation and
Presentation of Financial Statements
 Framework for the Preparation and Presentation of Financial
Statements
14
Which are international
accounting standards(IAS)?
 IAS 1 Presentation of Financial Statements
 IAS 2 Inventories IAS 3 Consolidated Financial Statements
Originally issued 1976, effective 1 Jan 1977. Superseded in 1989 by IAS 27
and IAS 28.
 IAS 4 Depreciation Accounting
Withdrawn in 1999, replaced by IAS 16, 22, and 38, all of which were
issued or revised in 1998. IAS 5 Information to Be Disclosed in Financial
Statements
Originally issued October 1976, effective 1 January 1997. Superseded by
IAS 1 in 1997. IAS 6 Accounting Responses to Changing Prices
Superseded by IAS 15, which was withdrawn December 2003 IAS 7 Cash
Flow Statements IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors IAS 9 Accounting for Research and Development
Activities Superseded by IAS 38 effective 1.7.99 IAS 10 Events After the
Balance Sheet Date IAS 11 Construction Contracts IAS 12 Income Taxes
IAS 13 Presentation of Current Assets and Current Liabilities
Superseded by IAS 1. IAS 14 Segment Reporting.
15
 Segment Reporting
 IAS 15 Information Reflecting the Effects of Changing
Prices
Withdrawn December 2003
 IAS 16 Property, Plant and Equipment
 IAS 17 Leases
 IAS 18 Revenue
 IAS 19 Employee Benefits
 IAS 20 Accounting for Government Grants and Disclosure of
Government Assistance
 IAS 21 The Effects of Changes in Foreign Exchange Rates
 IAS 22 Business Combinations
Superseded by IFRS 3 effective 31 March 2004.
 IAS 23 Borrowing Costs
 IAS 24 Related Party Disclosures
16
 IAS 25 Accounting for Investments
Superseded by IAS 39 and IAS 40 effective 2001.
 IAS 26 Accounting and Reporting by Retirement Benefit Plans
 IAS 27 Consolidated and Separate Financial Statements IAS 28
Investments in Associates
 IAS 29 Financial Reporting in Hyperinflationary Economies
 IAS 30 Disclosures in the Financial Statements of Banks and
Similar Financial Institutions
Superseded by IFRS 7 effective 2007.
 IAS 31 Interests In Joint Ventures
 IAS 32 Financial Instruments: Presentation
Disclosure provisions superseded by IFRS 7 effective 2007.
 IAS 33 Earnings Per Share
 IAS 34 Interim Financial Reporting
 IAS 35 Discontinuing Operations
Superseded by IFRS 5 effective 2005.
 IAS 36 Impairment of Assets
 IAS 37 Provisions, Contingent Liabilities and Contingent Assets
 IAS 38 Intangible Assets
 IAS 39 Financial Instruments: Recognition and Measurement
 IAS 40 Investment Property
 IAS 41 Agriculture
17
FASB
Since 1973 the FASB has been the organization

designated to establish authoritative financial
accounting and reporting standards (Statements
of Financial Accounting Standards, SFAS) for
business and other private-sector entities. Its
mission is to be responsive to the entire economic
community and to operate in full view of the
entire community through a due-process system.
18
SEC
Under the Securities and Exchange Act of 1934, the SEC has
statutory authority to establish financial accounting and reporting
standards for publicly-held companies. Recent accounting-related
scandals, such as Enron, prompted the SEC and Congress to get
more directly involved in the oversight of the standards setting
process and the monitoring of corporate governance. In August
2002, as part of the Sarbanes-Oxley Act, the SEC's Public Company
Accounting Oversight Board (PCAOB) was created to crack down
on corporate accounting scandals. Authorized to conduct
inspections and discipline accountants, the oversight board
supplants the self-regulation of CPAs who audit public companies.
19
IASB
Formed in January 2001, the ISAB replaced its predecessor, the
International Accounting Standards Committee (IASC), as the
international standards setting body. Looking towards greater
formalization of international accounting standards, IASB is
structured similarly to the FASB. It is currently the focus of the
IASB, in collaboration with the FASB and other accounting focused
organizations, to "converge" standards and develop a single,
universally accepted set of biding international accounting
standards. The IASC, and now IASB, issue a series of standards
known as International Financial Reporting Standards (IFRS),
formerly called International Accounting Standards (IAS).
20
IASB, IASCF, and IASC Defined
The International Accounting Standards Board is an independent,
private-sector body that develops and approves International
Financial Reporting Standards. The IASB operates under the
oversight of the International Accounting Standards Committee
Foundation. The IASB was formed in 2001 to replace the
International Accounting Standards Committee.
IASCF: International Accounting Standards Committee Foundation
The International Accounting Standards Committee Foundation is the
independent, non-profit foundation, created in 2000 to oversee
the IASB. Click for more information about the IASCF Structure.
IASC: International Accounting Standards Committee
From 1973 until a comprehensive reorganization in 2000, the
structure for setting International Accounting Standards was
known as the International Accounting Standards Committee.
There was no actual "committee" of that name. The standard-
setting board was known as the IASC Board.
21
Description of IFAC
The International Federation of Accountants (IFAC) is an
association of national professional accountancy organizations
that represent accountants employed in public practice, business
and industry, the public sector, and education, as well as some
specialized groups that interface frequently with the profession.
IFAC works to develop the profession globally and to harmonies
professional standards worldwide to enable accountants to
provide services of consistently high quality in the public interest
across political borders. Currently, IFAC has 155 member bodies
and associates in 118 countries, representing over 2.5 million
accountants.
22
International Accounting
Education Standards Board
 The International Accounting Education Standards Board (IAESB)
– formerly the IFAC Education Committee – develops guidance to
improve the standards of accountancy education around the world
and focuses on two key areas:
 The essential elements of accreditation, which are education,

practical experience and tests of professional competence; and
 The nature and extent of continuing professional education

needed by accountants.
23
International Auditing and
Assurance Standards Board
International Standards on Auditing (ISAs) are set by the
International Auditing and Assurance Standards Board (IAASB) --
until 2002 known as the International Auditing Practices
Committee (IAPC). The ISA on the auditor's report on financial
statements requires that the auditor's opinion must clearly
indicate the financial reporting framework used to prepare the
financial statements (including the country of origin of the
financial reporting framework when the framework used is not
International Accounting Standards) and state the auditor's
opinion as to whether the financial statements give a true and fair
view (or are presented fairly, in all material respects) in
accordance with that financial reporting framework and, where
appropriate, whether the financial statements comply with
statutory requirements
24
 Originally, the AICPA, the memberships association for CPAs, was
the body responsible for defining accounting standards.
 1939-1959 - issues Accounting Research Bulletins (ARB)
 1959-1973 - Accounting Principles Board (APB) issues series of
opinions
 1973 - Accounting Principles Board dissolved and standards
setting responsibility is transferred to FASB. The AICPA continues
its role as authoritative body for establishing auditing standards
(Statement of Auditing Standards, SAS)
 In 1973, the AICPA shifted its focus to supporting it membership
and constituency and bringing to the attention of the FASB and
SEC issues that it determined important to the accounting and
auditing professional communities. While the AICPA continued
issuing auditing standards, this responsibility is now being
assumed by the Public Company Accounting Oversight Board
(PCAOB), a body created by the Sarbanes-Oxley Act of 2002. The
Oversight Board's recent authorization to become directly involved
with issues auditing standards could have significant impact on
the current standards setting process. 25
Accounting
The House of GAAP
 The role that accounting standards play in establishing the rules for disclosing
both public and private financial reporting assumes levels of authority of "more
to less" which guide reliance on and determines the weight of the standards.
Understanding this hierarchy is paramount to grasping the meaning of
"generally accepted accounting principles" (GAAP), and the many supporting
documents.
 The concept of the "house of GAAP" was introduced in a 1984 article from the
Journal of Accountancy. The author describes and defines the vast universe of
accounting standards as a hierarchy structured along the lines of the floor plan
of a house. "Like any other structure, the house of GAAP rests on a foundation,
in this case a foundation of the basic concepts and broad principles that
underlie financial reporting, without which, like a house of cards, the house of
GAAP would tumble." 1
 In 199I the AICPA's Auditing Standards Board remodeled the house of GAAP by
changing some of the levels of authority of certain accounting pronouncements
and distinguishing between the standards defining state and local government
entities, established by the Government Accounting Standards Board (GASB)
and those for all others, falling under the FASB's jurisdiction. 2
 Using Rubin's visual model of a house, following is the floor plan adapted to the26
revised hierarchy:
First Floor (Category A)
 Constitutes the highest level of GAAP authority. Officially established,
authoritative accounting principles; also referred to as authoritative
literature or pronouncements.
 FASB Statements of Financial Accounting Standards (SFAS)
 FASB Interpretations (FIN) which modify, extend, clarify and elaborate on
existing SFAS, AICPA Accounting Principles Board Opinions and Accounting
Research Bulletins
 AICPA Opinions and their Interpretations which have not been superseded
 AICPA Accounting Research Bulletins which have not been superseded
 Examples:
 Statement of Financial Accounting Standards No. 131, Disclosures
about Segments of an Enterprise and Related Information
 APB Opinion No. 18, The Equity Method of Accounting for Investments
in Common Stock
 Second Floor (Category B) Pronouncements
27
Second Floor (Category B)
• Pronouncements of organizations, composed of expert
accountants, that discuss and analyze accounting issues in public
for the purpose of establishing accounting principles or describing
existing accounting practices that are generally accepted and
approved by FASB and GASB and have been exposed for public
comment:
• FASB Technical Bulletins (TB)
• AICPA Industry Audit and Accounting Guides
• AICPA Statements of Position (SOP)
• Examples:
• SOP 97-2, Software Revenue Recognition
• FASB Technical Bulletin No. 01-1, Effective Date for Certain
Financial Institutions of Certain Provisions of Statement 140
Related to the Isolation of Transferred Financial Assets
28
Third Floor (Category C)
Includes
 Includes pronouncements of organizations, composed of expert
accountants, organized by FASB, that discuss and debate
accounting issues in public forums for the purpose of interpreting
and establishing accounting principles or describing existing
accounting practices that are generally accepted:
 FASB Emerging Issues Task Force (EITF) consensus position
 AICPA Practice Bulletins approved by the FASB
 Examples:
 EITF Issue No. 98-10, Accounting for Contracts Involved in
Energy Trading and Risk Management Activities
 AICPA Practice Bulletin 14, Accounting and Reporting by
Limited Liability Companies and limited Liability Partnerships
29
Fourth Floor (Category D)
 If an accounting treatment is not specified in a source from any of
the first three floors, the accountant may consider other
accounting literature; the appropriateness of the source depends
on its relevance to particular circumstances, the specificity of the
guidance, and the general recognition of the author as an
authority:
 AICPA Accounting Interpretations
 FASB Implementation Guides in Q and A format
 Unlearned AICPA Statements of Position and Industry Audit and
Accounting Guides
 Industry practices that are widely recognized and prevalent
 Examples:
 FASB Special Report, A Guide to Implementation of Statement
125 on Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities
 AICPA Accounting Interpretations, Reporting the Results of
Operations: Accounting Interpretations of APB Opinion No. 30
30
Fifth Floor (Category E)
 When a generally accepted accounting pronouncement is not
covered by Categories A-D, the independent auditor may use other
sources of guidance as deemed relevant:
 FASB Financial Accounting Concepts (CON)
 AICPA Accounting Principles Board Statements
 AICPA Issues Papers
 Pronouncements of other professionals associations or regulatory
agencies
 AICPA Technical Practice Aids
 Accounting textbooks, handbooks and articles
 Examples:
 AICPA Issues Paper, Identification and Discussion of Certain
Financial Accounting and Reporting Issues Concerning LIFO
Inventories
 FASB Concept No. 5, Recognition and Measurement in Financial
Statements of Business Enterprise
31
PCAOB (USA)
• Formed in 2002 to oversee the audit of public companies that are

subject to the securities laws in the preparation of informative,
fair and independent audit reports. The Board's authority includes:
• ..Registering public accounting firms that prepare audit reports for
issuers
..Conducting inspections of registered public accounting firms
..Conducting investigations and disciplinary proceedings and
impose appropriate sanctions
..Enforcing compliance by registered public accounting firms
relating to the preparation and issuance of audit reports and the
obligations and liabilities of accountants
..Establishing auditing, quality control, ethics, independence, and
other standards relating to the preparation of audit reports for
issuers
32
POB (UK)
• The Professional Oversight Board contributes to the achievement
of the Financial Reporting Council's own fundamental aim of
supporting investor, market and public confidence in the financial
and governance stewardship of listed and other entities by
providing:
• independent oversight of the regulation of the auditing profession
by the recognized supervisory and qualifying bodies
• monitoring of the quality of the auditing function in relation to
economically significant entities
• independent oversight of the regulation of the accountancy
profession by the professional accountancy bodies
• independent oversight of the regulation of the actuarial profession
by the professional actuarial bodies and promoting high quality
actuarial work. The Professional Oversight Board for
Accountancy has changed its name as of 5 May 2006 to the
Professional Oversight Board. This reflects the extension of its
board's remit to include oversight of the regulation of the actuarial
profession.
33
AADB (UK)
• The Accountancy & Actuarial Discipline Board ("AADB") is the independent,
investigative and disciplinary body for accountants and actuaries in the UK. It has up
to eleven members.
• The AADB is responsible for operating and administering an independent disciplinary
scheme (the Accountancy Scheme) covering members of the following accountants'
professional bodies:- the Association of Chartered Certified Accountants, the
Chartered Institute of Management Accountants, the Chartered Institute of Public
Finance and Accountancy and the Institute of Chartered Accountants in England and
Wales; The Institute of Chartered Accountants of Ireland and the Institute of
Chartered Accountants of Scotland.
• The AADB will operate & administer a separate independent disciplinary scheme (the
Actuarial Scheme) covering members of the Faculty & Institute of Actuaries, which
will be adopted as soon as necessary formalities have been completed.
• The focus of the AADB is on cases of public interest; other cases will continue to be
dealt with by the individual accountancy body of the member concerned or by the
Faculty & Institute of Actuaries. The normal channel of reference to the AADB for
'public interest' cases will be the accountancy or actuarial body primarily concerned.
However, the AADB also has the power to call in cases whether or not they have been
referred to it by an accountancy body. The AADB will also have the power to call in
actuarial cases.
• The AADB was formerly known as the Accountancy Investigation & Discipline Board
(AIDB). It changed its name to the AADB on 16/08/2007.
34
GAAS
Generally Accepted Auditing Standards (GAAS). Established by the

AICPA, these standards govern the conduct of external audits by
public accountants. The Statement of Auditing Standards (SAS)
provide guidelines for the auditors' field work and financial
reporting. They frame the format and contents of the Auditor's
Report or Opinion, which is the formal expression of their
examination of a company's financial statements. In May 2003,
the PCAOB was given the official go-ahead to assume
responsibility for establishing GAAS. It remains to be seen exactly
how the PCAOB's new role will play out, its impact on the AICPA's
responsibilities, and the form in which the two entities will co-
exist.
35
GAS
Governmental Accounting Standards (GAS). While GAAP defines
the accounting for public and private business entities, there also
exist standards specific to governmental organizations. Organized
in 1984 to establish standards of financial accounting and
reporting for state and local governmental entities, the
Governmental Accounting Standards Board (GASB), began issues
these standards to guide the preparation of external reports for
these types of organizations.
36
Industry Accounting Practices
Some industries have created their won
accounting practices to fill gaps not
covered by floors 1-4 of GAAP. These
practices are often available in print
publications issued by the overseeing
industry association. On occasion they are
also posted on the associations web site.
Examples of industries which have
adopted their own practices are healthcare
and insurance.
37
Sarbanes-Oxley Act of
2002
• The S&O Act was passed as a direct result of a series of major
corporate financial accounting scandals. This legislation directly
impacts accountants and attorneys, officers and owners of publicly
traded companies, as well as brokers, dealers, investment
bankers, and financial analysts. The Act, PL 107-204, established
the Public Company Accounting Oversight Board (PCAOB),
responsible for registering, monitoring, investigating, and
disciplining the activities of public accounting firms, including
establishing the guidelines for the conduct of several key auditing
procedures no delineating the types of services that CPAs are
prohibited from providing to audit clients. The Act additionally sets
forth a number of requirements for corporations, their officers and
Board members, by redefining working and reporting relationships
with their internal audit committee members and public
accounting firms, creating changes in internal controls procedures
and enhancing financial disclosures.
38
What is Corporate Governance?
Good corporate governance is essential to the effective operation of a free market,

which enables wealth creation and freedom from poverty. The main point of
Corporate governance same Sarbox ,EU & UK regulation requires CEOs and CFOs to
sign off on their companies' internal controls
• A framework which should ensure that timely and accurate disclosure is made on all
matters regarding the corporation, including the financial, performance, ownership,
and governance of the company. It relies on mechanisms and rules which ensure the
protection of all interest groups and help to build and consolidate the reputation and
the market value of the company.
• The mechanisms of corporate governance apply to every level of authority in the
corporation - Board of Directors, Audit Committee, Compensation Committees and
others. The Board of Directors must have strong independent representation. The
Audit Committee provides the main point of communication between the external
auditors and the shareholders.
• Auditors also play a primary role in corporate governance. An important aspect of
their work involves independence from any pressure, from either management or
shareholders. The terms of engagement of their work, and constant contact with both
operating management, boards of directors and related committees will guarantee
the independence and reliability of financial statements
39
Timeline of Corporate Governance
• The Cad bury Report (1992), UK

• Green bury Report (1995) , UK
• Hampel Report (1998), UK
• The Smith Report (2003), UK
• The Higgs Review (2003), UK
• The Company Law White Paper (2002)
• Sarbanes- Oxley Act 2002 USA
• The Tyson report on the Recruitment
• Development of Non-Executive Directors (2003)
• The European Commission’s Action Plan for
• Company Law and Corporate Governance (2003)
40
The key aspects of corporate
governance in the UK
 A single board collectively responsible for the success of the
company.
 Checks and balances:
 Separate Chief Executive and Chairman.
 A balance of executive and independent non-executive directors.
 Strong, independent audit and remuneration committees.
 Annual evaluation by the board of its performance.
 Emphasis on objectivity of directors in the interests of the
company.
 Transparency on appointments and remuneration.
 Effective rights for shareholders.
 A Code of good practice based on extensive consultation with
 practitioners, and operating on the basis of the 'comply or explain'
 principle.
41
CHRONOLOGY OF IASC AND
IASB (1)
1966
 Proposal to create an Accountants International Study
Group is agreed to by professional accountancy bodies in
Canada, United Kingdom, and United States to develop
comparative studies of accounting and auditing practices in
the three nations.
 1967
 Accountants International Study Group is created.
Precursor to IASC.
 1968
 First AISG study: comparative accounting practices for
inventories in Canada, UK, and US. AISG published a total of
20 studies through 1977, when it was disbanded. Some
were used by IASC in its early standards.
42
CHRONOLOGY OF IASC
AND IASB (2)
1972
• Proposal for IASC is put forward by Sir Henry Benson at
10th World Congress of Accountants in Sydney. Discussed
with the three AISG countries (Canada, UK, and US).
• Further discussions of the Benson proposal including
representatives of Australia, France, Germany, Japan, the
Netherlands, and Mexico.
43
International Accounting
Standards Committee (IASC)
1973-2000
1973 Events
• Agreement to establish IASC signed by representatives of the professional
accountancy bodies in Australia, Canada, France, Germany, Japan, Mexico,
Netherlands, United Kingdom/Ireland, and United States.
• IASB opens an office at 3 St. Helen's Place, London.
• Paul Rosenfield (US, on secondment from AICPA) is appointed first
Secretary of IASC.
• IASC holds its inaugural meeting 29 June, London.
• Sir Henry Benson elected first Chairman of IASC.
• IASC adopts its initial agenda of three technical projects: Accounting
Policies, Inventories, Consolidated Financial Statements.
• Steering committees are appointed for the above three projects (the first
IASC steering committees).
• First meeting of an IASC steering committee (IAS 1, Disclosure of
Accounting Policies).
• IASC holds Board meetings in London
44
1974
Events
• First associate members of IASC are admitted: Belgium,
India, Israel, New Zealand, Pakistan, and Zimbabwe.
• IASC holds Board meetings in London (3) and Paris.
Exposure Drafts Published:
• E1 Disclosure of Accounting Policies
• E2 Valuation and Presentation of Inventories in the
Context of the Historical Cost System
• E3 Consolidated Financial Statements and the Equity
Method of Accounting
Final Standards Published:
• None
45
1975
Events
• Proposal to create an International Federation of
Accountants (IFAC) to replace the International
Coordinating Committee for the Accounting Profession
(ICCAP).
• IASC holds Board meetings in London (3) and Montreal.
• E4 Depreciation Accounting
• E5 Information to be Disclosed in Financial Statements
• IAS 1 (1975) Disclosure of Accounting Policies
• IAS 2 (1975) Valuation and Presentation of Inventories
in the Context of the Historical Cost System
46
1976
Events
• Joseph P. Cummings of the United States becomes chairman of
IASC.
• “Group of Ten” Bank Governors funds an IASC project on bank
financial statements.
• IASC holds Board meetings in London (2) and Washington.
• E6 Accounting Treatment of Changing Prices
• E7 Statement of Source and Application of Funds
• E8 The Treatment in the Income Statement of Unusual Items and
Changes in Accounting Estimates and Accounting Policies
• IAS 3 (1976) Consolidated Financial Statements
• IAS 4 (1976) Depreciation Accounting
• IAS 5 (1976) Information to be Disclosed in Financial Statements
47
1977
Events
• IASC Constitution is revised to add to two seats to the IASC Board (in
addition to the 9 founder countries), bringing the total to 11. Nine votes are
required to adopt a Standard, giving the 9 founder members substantial
control. Also, this revised Constitution identified the standards-setting body
as the 'Board' of the IASC, not a 'committee'.
• IFAC is formed. AISG is disbanded.
• IASC holds Board meetings in London, Amsterdam, and Edinburgh.
• E9 Accounting for Research and Development Costs
• E10 Contingencies and Events Occurring After the Balance Sheet Date
• E11 Accounting for Foreign Transactions and Translation of Foreign
Financial Statements
• E12 Accounting for Construction Contracts
• IAS 6 (1977) Accounting Responses to Changing Prices
• IAS 7 (1977) Statement of Changes in Financial Position
48
1978
Events
• John A. Hepworth of Australia becomes chairman of IASC.
• South Africa and Nigeria join Board, increasing Board size to 11.
• IASC holds Board meetings in London (2) and Perth (Australia).
• For the first time, IASC rejects a proposed standard (based on E11,
Accounting for Foreign Transactions and Translation of Foreign Financial
Statements), and a new steering committee is appointed for a fresh start.
• IASC begins discussions with the International Federation of Accountants
(IFAC) on 'mutual commitments' regarding the relationship between the
two bodies.
• E13 Accounting for Taxes on Income
• E14 Current Assets and Current Liabilities
• IAS 8 (1978) Unusual and Prior Period Items and Changes in Accounting
Policies
• IAS 9 (1978) Accounting for Research and Development Activities
• IAS 10 (1978) Contingencies and Events Occurring After the Balance Sheet
Date 49
1979
Events
• Allan V. C. Cook becomes secretary of IASC.
• IASC meets OECD working group on accounting standards.
• IASC holds Board meetings in London (2) and Mexico City.
• None
• IAS 11 (1979) Accounting for Construction Contracts
• IAS 12 (1979) Accounting for Taxes on Income
• IAS 13 (1979) Presentation of Current Assets and Current Liabilities
50
1980
Events
 J. A. (Hans) Burggraaff of Netherlands becomes chairman of IASC.
 IASC publishes a discussion paper on bank disclosures (project funded by 'Group of
Ten' Bank Governors).
 IASC holds Board meetings in London, Berlin, and Dublin
 United Nations Intergovernmental Working Group on Accounting and Reporting
meets for first time. IASC proposes a cooperative working arrangement with UN
group.
 Exposure Drafts Published:
 E15 Reporting Financial Information by Segment
 E16 Accounting for Retirement Benefits in the Financial Statements of Employers
 E17 Information Reflecting the Effects of Changing Prices
 E18 Accounting for Property, Plant and Equipment in the Context of the Historical
Cost System
 E19 Accounting for Leases
 Final Standards Published:
 None
51
1981
Events
 Geoffrey B. Mitchell becomes Secretary of IASC. Title is changed to Secretary-General
during his tenure.
 IASC Consultative Group is formed to advise IASC on agenda projects and priorities.
Consultative Group members represent both accounting and non-accounting
organizations with an interest in financial reporting (stock exchanges, bankers,
lawyers, business, unions, government, United Nations, World Bank, OECD, etc.).
First meeting in October 1981.
 IASC begins a joint project on accounting for income taxes with standard setters from
the Netherlands, UK, and USA.
 IASC holds Board meetings in London (2) and Tokyo.
 E20 Revenue Recognition
 E21 Accounting for Government Grants and Disclosure of Government Assistance
 E22 Accounting for Business Combinations
 IAS 14 (1981), Reporting Financial Information by Segment
 IAS 15 (1981), Information Reflecting the Effects of Changing Prices
52
1982
Events
 Stephen Elliott of Canada becomes chairman of IASC. IASC and IFAC make
mutual commitments. The IASC Board is expanded to up to 17 members,
including 13 country members appointed by the Council of IFAC and up to 4
representatives of organizations with an interest in financial reporting. All
members of IFAC are members of IASC. IFAC recognizes and will look to
IASC as the global accounting standard setter. Special constitutional status
of the 9 founder members of IASC is eliminated.
 IASC holds Board meetings in London (2) and Amsterdam.
 E23 Accounting for the Effects of Changes in Foreign Exchange Rates
 E24 Capitalization of Borrowing Costs
 IAS 16 (1982) Accounting for Property, Plant and Equipment
 IAS 17 (1982) Accounting for Leases
 IAS 18 (1982) Revenue Recognition
53
1983
Events
• Italy joins IASC Board.
• Expanded IASC Board under the revised Constitution takes effect.
• IASC holds Board meetings in London, Edinburgh, and Paris.
• Title of senior staff executive changed from 'Secretary' to 'Secretary-
General'.
• E25, Disclosure of Related Party Transactions
• IAS 19 (1983) Accounting for Retirement Benefits in the Financial
Statements of Employers
• IAS 20 (1983) Accounting for Government Grants and Disclosure of
Government Assistance
• IAS 21 (1983) Accounting for the Effects of Changes in Foreign Exchange
Rates
• IAS 22 (1983) Accounting for Business Combinations
54
1984
Events
 Taiwan joins IASC Board.
 IASC holds a formal meeting with the US Securities and Exchange
Commission.
 IASC holds Board meetings in London, Toronto, and Düsseldorf.
 E26 Accounting for Investments
 IAS 23 (1984) Capitalization of Borrowing Costs
 IAS 24 (1984) Related Party Disclosures
55
1985
Events
 John L. Kirkpatrick of UK becomes chairman of IASC.
 David Cairns becomes Secretary-General of IASC.
 IASC participates in an OECD forum on global accounting harmonization.
 IASC responds to SEC proposals for a multinational prospectus.
 IASC holds Board meetings in London, Rome, and New York.
 E27, Accounting and Reporting by Retirement Benefit Plans
 None
56
1986
Events
 Financial analysts (International Coordinating Committee of Financial
Analysts Associations) get a seat on the IASC Board.
 IASC co-sponsors a conference with New York Stock Exchange and
International Bar Association on the globalization of financial markets.
 IASC holds Board meetings in London, Dublin, and Amsterdam
 E28 Accounting for Investments in Associates and Joint Ventures
 IAS 25 (1986) Accounting for Investments
57
1987
Events
 Georges Barthes de Ruyter of France becomes chairman of IASC.
 IASC begins its Comparability and Improvements Project. Objective is to
reduce or eliminate alternatives and make standards more detailed and
prescriptive rather than flexible and descriptive of current practice.
 International Organization of Securities Commissions (IOSCO) joins the
Consultative Group and supports the Comparability project.
 IASC publishes its first Bound Volume of International Accounting
Standards, containing the standards extant at 1 September 1987.
 IASC holds Board meetings in Sydney and Edinburgh.
 E29 Disclosures in the Financial Statements of Banks
 E30 Consolidated Financial Statements and Accounting for Investments in
Subsidiaries
 E31 Financial Reporting in Hyperinflationary Economies
 IAS 26 (1987), Accounting and Reporting by Retirement Benefit Plans
58
1988
Events
 Jordan, Korea and the Nordic Federation (representing accounting bodies in
Norway, Denmark, Sweden, Finland, and Iceland) join the IASC Board,
replacing Mexico, Nigeria, and Taiwan.
 Financial instruments project started in conjunction with Canadian
Accounting Standards Board.
 IASC publishes a survey on the use of IAS.
 FASB joins the Consultative Group and becomes an observer at the IASC
Board table.
 IASC holds Board meetings in Düsseldorf, Toronto, and Copenhagen.
 Exposure Draft: Framework for the Preparation and Presentation of
Financial Statements
 None
59
1989
Events
 European Accounting Federation (FEE) supports international harmonization
and greater European involvement in IASC.
 IFAC adopts a public sector guideline to require government business
enterprises to follow IAS.
 IASC holds Board meetings in Brussels and New York.
 IASC publishes its Framework for the Preparation and Presentation of
Financial Statements.
 E32 Comparability of Financial Statements
 E33 Accounting for Taxes on Income
 E34 Disclosures in the Financial Statements of Banks and Similar Financial
Institutions
 E35 Financial Reporting of Interests in Joint Ventures
 IAS 27 (1989) Consolidated Financial Statements and Accounting for
Investments in Subsidiaries
 IAS 28 (1989) Accounting for Investments in Associates
 IAS 29 (1989) Financial Reporting in Hyperinflationary Economies
60
1990
Events
 Statement of Intent - Comparability of Financial Statements.
 Arthur R. Wyatt of the United States becomes chairman of IASC.
 European Commission joins the Consultative Group and takes a seat at the
IASC Board table as an observer. Bank regulators and asset valuers also
join the Consultative Group.
 A programmed to seek external funding is launched.
 IASC holds Board meetings in Amsterdam, Paris, and Singapore.
 None
 IAS 30 (1990) Disclosures in the Financial Statements of Banks and Similar
Financial Institutions
 IAS 31 (1990) Financial Reporting of Interests in Joint Ventures
61
1991
Events
 IASC organizes a conference of national standard setters in conjunction
with FEE and FASB.
 US FASB indicates its support for international accounting standards.
 IASC holds Board meetings in London, Milan, and Seoul
 E36 Cash Flow Statements
 E37 Research and Development Activities
 E38 Inventories
 E39 Capitalization of Borrowing Costs
 E40 Financial Instruments
 None
62
1992
Events
• IASC constitution revised.
• IASC holds Board meetings in Madrid, Amman, and Chicago
• E41 Revenue Recognition
• E42 Construction Contracts
• E43 Property, Plant and Equipment
• E44 The Effects of Changes in Foreign Exchange Rates
• E45 Business Combinations
• E46 Extraordinary Items, Fundamental Errors and Changes in Accounting
Policies
• E47 Retirement Benefit Costs
•
Revision:
63
1993
Events
• Eiichi Shiratori of Japan becomes chairman of IASC.
• India replaces Korea on Board.
• IASC and IOSCO agree on a list of core standards.
• Comparability and Improvements project completed with approval of ten revised IAS. However,
IOSCO did not endorse IAS at that time for use in cross-border securities offerings.
• South African Institute of Chartered Accountants decides that South African accounting standards
should be based on IAS -- existing South African GAAP to be revised.
• IASC holds Board meetings in Tokyo, London, and Oslo.
• Exposure Drafts Published:
• None
• Final Standards Published:
• Revisions:
• IAS 2 (revised 1993) Inventories

• IAS 8 (revised 1993) Net Profit or Loss for the Period, Fundamental Errors and Changes in
Accounting Policies
• IAS 9 (revised 1993) Research and Development Costs
• IAS 11 (revised 1993) Construction Contracts
• IAS 16 (revised 1993) Property, Plant and Equipment
• IAS 18 (revised 1993) Revenue
• IAS 19 (revised 1993) Retirement Benefit Costs
• IAS 21 (revised 1993) The Effects of Changes in Foreign Exchange Rates
• IAS 22 (revised 1993) Business Combinations
• IAS 23 (revised 1993) Borrowing Costs
64
1994
Events
 Board meets with standard setters to discuss E48, Financial Instruments.
 Accounting educators join Consultative Group.
 World Bank agrees to fund Agriculture project.
 Establishment of IASC Advisory Council approved, with responsibilities for
oversight and finances.
 IOSCO accepts 14 IAS and identifies some specific issues to be addressed in
the remaining core standards (the so-called 'Shiratori letters').
 FASB agrees to work with IASC on a joint earnings per share project.
 The G4+1 group, which includes IASC as the '+1', publishes its first study on
Future Events.
 IASC holds Board meetings in Edinburgh and Budapest.
 E48 Financial Instruments
 E49 Income Taxes
 None
65
1995
 Events
 Michael Sharpe of Australia becomes chairman of IASC.
 Sir Bryan Carsberg becomes Secretary-General of IASC.
 IASC agrees with IOSCO to complete the core standards by 1999. IOSCO states that if the core
standards are successfully completed, IOSCO will review them with the objective of endorsing
IAS for cross-border offerings.
 First German companies report under IAS.
 Federation of Swiss Holding Companies takes a seat on the IASC Board.
 Malaysia and Mexico replace Italy and Jordan on Board. India and South Africa agree to share
Board seats with Sri Lanka and Zimbabwe, respectively.
 World Bank's accounting handbook states that 'in the absence of any superior national standards,
the Bank requires the use of IASs in the preparation of financial statements'.
 European Commission supports the IASC/IOSCO agreement and concludes that IAS should be
followed by EU multinationals.
 IASC holds Board meetings in Düsseldorf, Amsterdam, and Sydney.
 E50 Intangible Assets
 E51 Reporting Financial Information by Segment
 New:
 IAS 32 (1995), Financial Instruments: Disclosure and Presentation
66
1996
Events
 IASB accelerates its core standards programmed by one year, with completion planned by the
end of 1998.
 International Association of Financial Executives Institutes joins IASC Board. IOSCO takes a seat
at the IASC Board table as an observer.
 IASC starts a joint project on Provisions with UK Accounting Standards Board.
 A study by the EU Contact Committee finds IAS compatible with EU directives, with minor
exceptions.
 US SEC announces its support of the IASC's objective to develop, as expeditiously as possible,
accounting standards that could be used for preparing financial statements used in cross-border
offerings.
 US Congress calls for 'a high-quality comprehensive set of generally accepted international
accounting standards'.
 Australian Stock Exchange supports a programmed to harmonies Australian standards with IAS.
 World Trade Organization encourages successful completion of international accountancy
standards.
 IASC holds Board meetings in Brussels, Stockholm, and Barcelona.
 E52 Earnings Per Share
 E53 Presentation of Financial Statements
 E54 Employee Benefits
 Revision:
 IAS 12 (revised 1996), Income Taxes
67
1997 (1)
 Events
 Standing Interpretations Committee is formed. 12 voting members.
 IASC and FASB issue similar EPS standards. IASC, FASB, and CICA issue new Segments
standards with relatively minor differences.
 IASC discussion paper proposes fair value for all Financial Assets and Financial Liabilities. IASC
holds 45 consultation meetings in 16 countries.
 Actuaries join Consultative Group.
 Arab Society of Certified Accountants calls for all of its 22 member countries to adopt IAS as their
national GAAP ('Dubai Declaration').
 APEC (Asia-Pacific Economic Cooperation) expresses its support of the efforts of the International
Accounting Standards Committee to develop international accounting standards.
 Joint Working Group on financial instruments formed with national standard setters.
 People's Republic of China becomes a member of IFAC and joins the IASC Board as observer.
 IASC sponsors a conference of accounting standard setters from 20 countries in Hong Kong.
 FEE calls on Europe to use IASC's Framework.
 US SEC reports to Congress on the outlook for successful completion of a set of international
accounting standards that would be acceptable in the US.
 IASC appoints a Strategy Working Party (SWP) to make recommendations regarding the future
structure and operation of IASC following completion of the core standards. First meeting in
April.
 IASC sets up its Internet website.
 IASC holds Board meetings in London, Johannesburg, Beijing, and Paris.
68
1997(2)
 E55 Impairment of Assets
 E56 Leases
 E57 Interim Financial Reporting
 E58 Discontinuing Operations
 E59 Provisions, Contingent Liabilities and Contingent Assets
 E60 Intangible Assets
 E61 Business Combinations
 New:
 IAS 33 (1997) Earnings Per Share Revisions:
 IAS 1 (revised 1997) Presentation of Financial Statements

 IAS 14 (revised 1997) Segment Reporting
 IAS 17 (revised 1997) Leases
 Final Interpretations Published:
 SIC 1 Consistency - Different Cost Formulas for Inventories
 SIC 2 Consistency - Capitalization of Borrowing Costs
 SIC 3 Elimination of Unrealized Profits and Losses on Transactions with Associates
69
1998(1)
 Events
 Stig Enevoldsen of Denmark becomes chairman of IASC.
 New laws in Belgium, France, Germany, and Italy allow large companies to use IAS
domestically in their consolidated financial statements.
 First official translation of IAS (German).
 IFAC/IASC membership expands to Latin America (new member bodies in Bolivia,
Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) as well as Haiti, Iran,
and Vietnam, bringing membership to 140 bodies in 101 countries.
 IFAC Public Sector Committee begins a programmed to develop International Public
Sector Accounting Standards based on IAS.
 Strategy Working Party proposes structural changes (including a bicameral standard-
setting structure) and closer ties to national standard-setters.
 In response to Asian financial crisis, the G8 Summit, the G7 finance ministers and
central bank governors, the World Bank, and the IMF all call for rapid completion and
global adoption of high quality international accounting standards.
 International Federation of Stock Exchanges expresses support for IAS.
 IAS published on CD ROM.
 IASC completes the core standards with approval of IAS 39 in December.
 IASC holds Board meetings in London, Kuala Lumpur, Niagara-on-the-Lake, Zurich,
and Frankfurt.
70
1998(2)
 E62 Financial Instruments: Recognition and Measurement
 E63 Events After the Balance Sheet Date
 New:
 IAS 34 (1998) Interim Financial Reporting

 IAS 35 (1998) Discontinuing Operations
 IAS 36 (1998) Impairment of Assets
 IAS 37 (1998) Provisions, Contingent Liabilities and Contingent Assets
 IAS 38 (1998) Intangible Assets
 IAS 39 (1998) Financial Instruments: Recognition and Measurement Revisions:
 IAS 16 (revised 1998) Property, Plant and Equipment

 IAS 19 (revised 1998) Employee Benefits
 IAS 22 (revised 1998) Business Combinations
 IAS 32 (revised 1998) Financial Instruments: Disclosure and Presentation
 SIC 5 Classification of Financial Instruments - Contingent Settlement Provisions
 SIC 6 Costs of Modifying Existing Software
 SIC 7 Introduction of the Euro
 SIC 8 First-Time Application of IASs as the Primary Basis of Accounting
 SIC 9 Business Combinations - Classification either as Acquisitions or Uniting of Interests
 SIC 10 Government Assistance - No Specific Relation to Operating Activities
 SIC 11 Foreign Exchange - Capitalization of Losses Resulting from Severe Currency Devaluations
 SIC 12 Consolidation - Special Purpose Entities
 SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Ventures
 SIC 14 Property, Plant and Equipment - Compensation for the Impairment or Loss of Items
71
1999(1)
 Events
 IOSCO begins its review of IASC core standards.
 IASC Board meetings are opened to public observation. First public meeting is held in
Washington in March.
 G7 Finance Ministers and IMF urge support for IAS to 'strengthen the international financial
architecture'.
 New IFAC International Forum on Accountancy Development (IFAD) commits to support 'use of
International Accounting Standards as the minimum benchmark for raising national accounting
standards' worldwide.
 EC study fins no significant conflicts between IAS and the European Directives. EC adopts a
financial services action plan that includes use of IAS as 'European GAAP'.
 FEE 'reporting strategy for Europe' strongly supports use of IAS in Europe without requiring
compliance with EC accounting Directives, plus phase-out of US GAAP.
 Eurasian Federation of Accountants and Auditors plans adoption of IAS in CIS countries.
 Various meetings of SWP to discuss the comments on their initial proposal and to develop final
recommendations. SWP publishes a revised proposal.
 IASC Board unanimously approves restructuring into 14-member board (12 full-time) under an
independent board of trustees.
 IASC Board appoints a Nominating Committee, chaired by US SEC Chairman Arthur Levitt, to
select first Trustees under new IASC structure.
 Looking beyond financial statements, IASC publishes a study of business reporting on the
Internet.
 IASC holds Board meetings in Washington, Warsaw, Venice, and Amsterdam.
72
1999(2)

 E64 Investment Property
 E65 Agriculture
 Revision:
 IAS 10 (revised 1999) Events After the Balance Sheet Date

 SIC 15 Operating Leases - Incentives
 SIC 16 Share Capital - Reacquired Own Equity Instruments
(Treasury Shares)
73
2000 (1)
 Events
 Thomas E. Jones (UK citizen, career primarily in the United States) becomes chairman of IASC.
 SIC meetings open to public observation.
 Basel Committee expresses support for IAS and for efforts to harmonies accounting
internationally.
 SEC issues a concept release inviting comments on the use of international accounting standards
in the United States.
 As part of restructuring programmed, IASC Board approves a new Constitution.
 IOSCO recommends that its members allow multinational issuers to use IASC standards in cross-
border offerings and listings.
 Nominating Committee announces initial Trustees of the restructured IASC. Paul Volcker, former
US Federal Reserve Board Chairman, will chair the board of trustees.
 IASC Member Bodies approve IASC's restructuring and a new IASC Constitution.
 European Commission announces a plan to require all EU listed companies to use IAS starting no
later than 2005.
 Trustees name Sir David Tweedie (chairman of the UK Accounting Standards Board) as the first
Chairman of the restructured IASC Board.
 Trustees announce search for new Board members. Over 200 applications are received.
 IASC Board approves limited revisions to IAS 12, IAS 19, and IAS 39.
 IASC publishes first batch of Implementation Guidance Q&A on IAS 39.
 IAS 41 Agriculture is approved at the last meeting of the IASC Board (published in 2001).
 IASC holds Board meetings in Sao Paulo, Copenhagen, Tokyo, London.
 As one of its last official acts, the IASC Board approves a Statement to the new IASC Board
commenting on projects to be carried forward and possible additional projects to be undertaken.
74
2000 (2)
• E66 Financial Instruments: Recognition and Measurement - Limited Revisions to IAS 39
• E67 Pension Plan Assets
• E68 Income Tax Consequences of Dividends
• New:
• IAS 40 (2000), Investment Property Revisions:
• IAS 12 (revised 2000) Income Taxes

• IAS 19 (revised 2000) Employee Benefits
• IAS 28 (revised 2000) Accounting for Investments in Associates
• IAS 31 (revised 2000) Financial Reporting of Interests in Joint Ventures
• Final Interpretations Published:
• SIC 17 Equity - Costs of an Equity Transaction
• SIC 18 Consistency - Alternative Methods
• SIC 19 Reporting Currency - Measurement and Presentation of Financial Statements under IAS
21 and IAS 29
• SIC 20 Equity Accounting Method - Recognition of Losses
• SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets
• SIC 22 Business Combinations - Subsequent Adjustment of Fair Values and Goodwill Initially
Reported
• SIC 23 Property, Plant and Equipment - Major Inspection or Overhaul Costs
• SIC 24 Earnings Per Share - Financial Instruments that May Be Settled in Shares
• SIC 25 Income Taxes - Changes in the Tax Status of an Enterprise or its Shareholders
75
2001 (1)
 Events
 Trustees appoint the initial 14 members of the International Accounting Standards Board.
 In March 2001, IASC Trustees activate Part B of IASC's new Constitution and establish a non-profit Delaware
corporation, named the International Accounting Standards Committee Foundation, to oversee the IASB.
 On 1 April 2001, the new IASB takes over from the IASC the responsibility for setting International Accounting
Standards. New Board holds its first meeting, adopts existing IAS and SICs, and deliberates its agenda and other
issues.
 Trustees appoint 49 charter members to the IASB Standards Advisory Council. First SAC meeting is held in July.
 European Commission presents legislation to require use of IASC Standards for all listed companies no later than
2005.
 EFRAG (European Financial Reporting Advisory Group) is created by the accounting profession, preparers, users,
and national standard-setters in EU countries to advise the European Commission on acceptability of individual
IAS for Europe, as well as to respond to IASB comment documents.
 European Directives amended to allow compliance with IAS 39.
 IASB moves into new offices at 30 Cannon Street, London.
 IASB meets with chairs of those national accounting standards-setting bodies that have a formal liaison
relationship with IASB - Australia/New Zealand, Canada, France, Germany, Japan, UK, and US - to begin
coordinating agendas and setting out convergence goals.
 IASB adopts its initial agenda of nine technical projects and agrees to have an advisory or monitoring role on 16
additional projects being worked on by partner national standard setters.
 Debate over IASB's stock options project reaches US Congress.
 Seven largest accounting firms strongly endorse IAS for Europe.
 New SEC Chief Accountant urges global convergence of accounting standards.
 Trustees appoint the members of the restructured Standing Interpretations Committee.
 IFAD publishes GAAP 2000 – a comparison of IAS and GAAP in 53 countries – as part of its effort to bring national
GAAP up to an IAS benchmark.
 IASB holds Board meetings in London (6), Washington, and Paris.
76
2001(2)
 Preface to International Financial Reporting Standards
 New:
 IAS 41 (2001) Agriculture (approved by old IASC Board in December 2000).

 SIC 27 Evaluating the Substance of Transactions in the Legal Form of a
Lease
 SIC 28 Business Combinations - 'Date of Exchange' and Fair Value of Equity
Instruments
 SIC 29 Disclosure - Service Concession Arrangements
 SIC 30 Reporting Currency - Translation from Measurement Currency to
Presentation Currency
 SIC 31 Revenue - Barter Transactions Involving Advertising Services
 SIC 33 Consolidation and Equity Method - Potential Voting Rights and
Allocation of Ownership Interests
77
2002 (1)
 Events
 IASB Chairman Sir David Tweedie and IASC Foundation Chairman Paul Volcker testify at US
Senate hearing on Accounting and Investor Protection Issues Raised by Enron and Other Public
Companies.
 IASB issues its first exposure draft and final Standard on an accounting issue (IAS 19, Employee
Benefits: The Asset Ceiling).
 SIC renamed to International Financial Reporting Interpretations Committee, with a mandate not
only to interpret existing IAS and IFRS but also to provide timely guidance on matters not
addressed in an IAS or IFRS.
 Europe adopts regulation requiring all listed companies, including banks and insurance companies,
to prepare their consolidated accounts in accordance with IAS starting 2005.
 IASB Board member Robert Herz is appointed chairman of the U.S. Financial Accounting
Standards Board.
 IASB issues its first exposure draft of a Standard that will be in its new series of International
Financial Reporting Standards: ED1 First-Time Application of International Financial Reporting
Standards.
 US accounting reform legislation requires FASB to consider international convergence in adopting
US GAAP.
 IASB Chairman Sir David Tweedie and IASC Foundation Chairman Paul Volcker both speak at the
opening plenary session of the World Congress of Accountants in Hong Kong.
 FASB and IASB hold a joint meeting and issue a memorandum of understanding pledging
convergence of their accounting standards and coordination of their work programmes.
78
2002 (2)
 Amendment to IAS 19, Employee Benefits: The Asset Ceiling
 Improvements to International Accounting Standards
 Amendments to IAS 32, Financial Instruments: Disclosure and Presentation,
and IAS 39: Financial Instruments: Recognition and Measurement
 ED 1: First-Time Application of International Financial Reporting Standards
 ED 2: Share-Based Payment
 ED 3: Business Combinations
 Amendments to IAS 36 and IAS 38
 Revisions:
 Preface to International Financial Reporting Standards (2002), replaced

Preface to Statements of International Accounting Standards (1982).
 IAS 19 (Revised 2002) Employee Benefits.
 SIC 32 Intangible Assets - Website Costs
79
2003 (1)
• Events
• IASB holds public roundtable discussions on financial instruments.
Representatives of 108 organization participate.
• IASB adopts the first standard in its new series of International Financial
Reporting Standards: IFRS 1, First-time Adoption of IFRS.
• IFRIC publishes its first draft Interpretation.
• Based on the recommendation of its Accounting Regulatory Committee, the
European Commission endorses all existing IAS (except IAS 32 and 39) for
use in Europe. Official translations are published.
• IFAC proposes that, to be a member of IFAC, an accountancy body must
commit to use its best endeavors to persuade governments and standard
setting bodies that published private sector financial statements should
comply with IFRSs.
• IASC Foundation trustees begin a constitution review.
80
2003 (2)
 ED 4 Disposal of Non-current Assets and Presentation of Discontinued Operations
 ED 5 Insurance Contracts
 Fair Value Hedge Accounting for a Portfolio Hedge of Interest Rate Risk
 New:
 IFRS 1 (2003), First-time Adoption of International Financial Reporting Standards

Revisions:
 IAS 1 Presentation of Financial Statements

 IAS 2 Inventories
 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
 IAS 10 Events after the Balance Sheet Date
 IAS 15 Information Reflecting the Effects of Changing Prices – Withdrawn
 IAS 16 Property, Plant and Equipment
 IAS 17 Leases
 IAS 21 The Effects of Changes in Foreign Exchange Rates
 IAS 24 Related Party Disclosures
 IAS 27 Consolidated and Separate Financial Statements
 IAS 28 Investments in Associates
 IAS 31 Interests in Joint Ventures
 IAS 32 Financial Instruments: Presentation and Disclosure
 IAS 33 Earnings per Share
 IAS 39 Financial Instruments: Recognition and Measurement
 IAS 40 Investment Property
81
2004 (1)
 Events
 IASB and various European groups engage in extensive discussions about IAS 32 and IAS 39.
 European Commission endorses all IASs and IFRSs for use in Europe except that two sections of IAS 39 are
'carved out'
 Australia, Hong Kong, New Zealand, and Philippines adopt improved IASs and IFRSs virtually word for word as
national GAAP.
 IASB and Accounting Standards Board of Japan begin convergence project.
 IASB initiates an internal review of its deliberative processes.
 IASC Foundation trustees propose constitutional changes, including super-majority vote.
 First web casts of an IASB board meeting.
 First IFRIC interpretation is published.
 First IASB Discussion Paper is published: Preliminary Views on Accounting Standards for Small and Medium-sized
Entities.
 ED 6 Exploration for and Evaluation of Mineral Resources
 ED 7 Financial Instruments: Disclosures
 Amendments to IFRS 3 Business Combinations: Combinations by Contract Alone or Involving Mutual Entities
 Amendments to IAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures
 Amendments to IAS 39 Financial Instruments: Recognition and Measurement - The Fair Value Option
 Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Financial Guarantee Contracts and
Credit Insurance
 Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Cash Flow Hedge Accounting of
Forecast Intragroup Transactions
 Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Transition and Initial Recognition
of Financial Assets and Financial Liabilities
82
2004 (2)
 New:
 IFRS 2 Share-based Payment

 IFRS 3 Business Combinations
 IFRS 4 Insurance Contracts
 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
 IFRS 6 Exploration for and Evaluation of Mineral Assets Revisions:
 IAS 19 Employee Benefits (Actuarial Gains and Losses, Group Plans and Disclosures)
 IAS 36 Impairment of Assets
 IAS 38 Intangible Assets
 IAS 39 Financial Instruments: Recognition and Measurement (Macro Hedging, Transition)
 New:
 IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

 IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments
 IFRIC 3 Emission Rights
 IFRIC 4 Determining Whether an Arrangement Contains a Lease
 IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental
Rehabilitation Funds Revisions:
 SIC 12 Consolidation–Special Purpose Entities (Scope amendment)
83
2005 (1)
• Events
• Meetings of IASB working groups opened to public observation.
• Constitutional changes adopted including expanding IASCF trustees from 19 to 22,
raising IASB vote from simple majority to 9 out of 14, and independent chair of SAC.
• IASB Board member appointed as chair of IFRIC.
• SEC publishes 'roadmap' to eliminating reconciliation from IFRSs to US GAAP.
• First independent chairman of SAC appointed.
• New IASB publication series proposed, but abandoned after public comments:
Technical Corrections.
• IASCF Trustees form Trustee Appointments Advisory Group.
• Amendments to IFRS 1 First-time Adoption of International Financial Reporting
Standards and IFRS 6 Exploration for and Evaluation of Mineral Resources.
• Amendments to IAS 19 Employee Benefits
• Amendments to IAS 27 Consolidated and Separate Financial Statements
• Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
• Replacement of IFRS 3 Business Combinations
84
Accounting standard-setters should encourage their
constituents to comment on IASB consultative documents
direct to the IASB as well as to the national or regional
standard-setter. Forms of communicating views other than
comment letters are increasingly important in gathering
views, including forums such as round-tables on specific
issues.
Accounting standard-setters should use these forums as a
mechanism for encouraging their constituents to participate
in the IASB’s standard-setting process, particularly those
constituents who might not otherwise make their views
known. Where practicable, the IASB should make Board
members and staff available to facilitate these forums.
85
Accounting standard-setters should be involved in round-
tables and other forums organised by the IASB in their
jurisdictions, and at the regional or global level where this
is practicable and relevant. They can assist the IASB in
identifying constituents who should be involved and issues
of particular relevance to constituents.
Without limiting the direct communication of ideas to the

IASB, accounting standard-setters have an important role
in communicating the views and ideas of their constituents
to the IASB through the consultation process—providing a
focus for views. Other organisations, such as representative
bodies, may also contribute to this.
86
Accounting standard-setters, not the IASB,
should encourage national and regional
regulators to participate in international
convergence efforts in their own
regulatory fields where this would help to
facilitate financial reporting convergence.
Accounting standard-setters around the
world have an important role in
communicating the work of the IASB to
their constituents through educational and
promotional activities, including publishing
and/or distributing IASB consultative
documents in their jurisdictions, and
providing the IASB with feedback.
87
FSF-IASB-IFAC Roundtable on Financial Reporting
and Auditing
“Regulatory and practical challenges in quality
implementation
of IFRS and IFAC standards”
Antoine Bracchi, Member of the Public Interest

Oversight Board
16 February 2006, Paris
88
2005 (2)
 New:
 IFRS 7 Financial Instruments: Disclosures Revisions:
 IAS 39 Financial Instruments: Recognition and Measurement – Cash Flow Hedge Accounting of
Forecast Intragroup Transactions
 IAS 39 Financial Instruments: Recognition and Measurement – Fair Value Option
 Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and
IFRS 6 Exploration for and Evaluation of Mineral Resources
 Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 4
Insurance Contracts with respect to financial guarantee contracts
 Amendments to IAS 1 Presentation of Financial Statements with respect to capital disclosures
 Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates with respect to net
investment in a foreign operation
 New:
 IFRIC 6 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic
Equipment
 IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary
Economies Revisions:
 IFRIC 3 Emission Rights – Withdrawn
89
2006 (1)
• Events
• Updated IASB-FASB agreement on convergence
• IASB statement on working relationships with other accounting standard
setters
• Trustees publish Due Process Handbook for the IASB
• Trustees propose due process steps for IFRIC
• IOSCO database on enforcement of IFRSs by securities regulators
• IASB announces that no new major standards will be effective before 2009
• ED 8 Operating Segments
• Amendments to IAS 1 Presentation of Financial Statements: A Revised
Presentation
• Amendment to IFRS 2 Share-based Payment: Vesting Conditions and
Cancellations
• Amendment to IAS 23 Borrowing Costs
• Financial Instruments Put table at Fair Value and Obligations Arising on
Liquidation
90
2006 (2)
• New:
• IFRS 8 Operating Segments Revisions:

• New:
• IFRIC 8 Scope of IFRS 2

• IFRIC 9 Reassessment of Embedded Derivatives
• IFRIC 10 Interim Financial Reporting and Impairment
• IFRIC 11 IFRS 2 Group and Treasury Share Transactions
• IFRIC 12 Service Concession Arrangements
91
2007
• Events
• Board proposes a separate IFRS for entities that are not in the
public capital markets
• Trustees publish Due Process Handbook for the IFRIC
• Trustees propose to expand IFRIC to 14 members, from 12
• International Financial Reporting Standard for Small and Medium-
sized Entities
• Amendments to IAS 24 Related Party Disclosures
• Amendments to IFRS 1 First-time Adoption of International Financial
Reporting Standards
• New:
Revisions:
• IAS 23 Borrowing Costs

• New:
Revisions:
92
Accounting Standards - Due
Process
• Due process of accounting standard development is as following:
• Deciding on a subject for research. The َAccounting Standard Setting Committee decides on the topics to be
considered by Standard Setting Department.
• Preliminary studies. After deciding on the subject, necessary research and studies are commenced by the advisors
of the Standard Setting Department. In this phase, the standards of other countries like USA, UK, Australia and
Canada, International Accounting Standards, research carried out in relation to the subject, accounting practice in
Iran and the law and all issues relating to the subject are recognized, collected and studied. The result of this
phase is presentation of study reports.
• Deciding on necessity of a standard development. The Standard Setting Committee decides on the necessity of
development of a standard based on the result of preliminary studies.
• Preparation of primary draft. If the standard development is required by the Accounting Standard Setting
Committee, the advisory group prepare a primary draft based on study reports, after field studies and some
meetings with professionals and constituents. One of the main policies of accounting standard development is
compliance with International Accounting Standards. Therefore, concerning the subject on which there is an
International Accounting Standard, this International Accounting Standard is used as the main basis for the
standard development. The outcome of this phase is the primary standard draft.
• Development of standard draft. In this phase, the Accounting Standard Setting Committee presents the final
standard draft, after deep and broad reviews and necessary amendments. The outcome of this phase is the
standard draft.
• Public comment. For public comment, any standard draft is made available to the public by different ways like
publishing in professional journals, Internet (Organization Site), etc. Also, according to the subject nature, the
standard draft is separately sent to some authorities.
The opinions received in respect of the standard draft is concluded and presented to the Accounting Standard
Setting Committee by the Standard Setting Department. The Committee amends, if necessary, the standard draft
and after approval by the Technical Committee, the revised standard draft is presented to the Board of Executive
of the Organization.
• Ultimate approval. The final statement will be published when the final text of the standard is approved by the
Board of Executive and the Board of Governors of the Organization. The Board of Executive reviews the
Accounting Standard and, after possible amendments, approves and sends them to the Board of Governors of the
Organization for the ultimate approval. After approval by the Board of Governors, the final text of the accounting
standard is published and becomes operative. 93
94
Comparison of Iranian Accounting
Standards with IFRSs
Accounting standards have been developed based on International
Accounting Standards. National Accounting Standards (NASs) are
presented in comparative form with International Accounting
Standards (IAS) in the following table.
In this table:
• The first column notifies the number of NASs.
• The second column designates the subject of NASs.
• The third column presents the number of IASs which have been
compared with their equivalent NASs.
• The fourth column specifies NASs which have minor departures
from IASs.
These are shown by notes presented in this column and are
explained thereafter.
95
NASs IASs
Subject Explanations
Nos. Nos.
1 Presentation of Financial Statements 1 ---
2 Cash Flow Statements 7 Note A
3 Revenue 18 ---
4 Accounting for Contingencies 10 ---
5 Accounting for Events After the Balance Sheet Date 10 ---
6 Reporting Financial Performance 8 ---
7 Accounting for Research & Development Costs 38 ---
8 Accounting For Inventories 2 ---
9 Accounting for Long-term Contracts 11 ---
10 Accounting for Government Grants 20 Note B
11 Accounting for Tangible Fixed Assets 16 ---
12 Related Party Disclosures 24 ---
13 Accounting for Borrowing Costs 23 ---
14 Presentation of Current Assets & Current Liabilities 1 ---
15 Accounting for Investments 32,39 Note C
16 Foreign Currency Translation 21 Note D
17 Accounting for Intangible Assets 38 ---
18 Consolidated Financial Statements and Accounting for Investments in Subsidiaries 27 Note E
19 Business Combinations 22 ---
20 Accounting for Investments in Associates 28 Note F
21 Accounting for Leases 17 ---
22 Interim Financial Reporting 34 ---
23 Accounting for Joint Ventures 31 ---
24 Financial Reporting by Development Stage Entities N/A Note G
25 Segment Reporting 14 Note H
26 Agriculture 41 Note I
27 Retirement Benefit Plans 26 --- 96

Explanations
• Note A (NAS # 2 and IAS # 7)
With the exception of the following requirements, application of NAS No. 2,
results into compliance with IAS No. 7:
• “Returns on Investments, and Servicing of Finance” and “Income Tax”
activities have been segregated from the other major classifications
used in the cash flow statements.
• (b) Cash equivalents have been excluded from the definition of cash.
• Note B (NAS # 10 and IAS # 20)
With the exception of the following requirements, application of NAS No. 10
results into compliance with IAS No. 20:
• (a) If an accounting treatment for government grants is specified in
statutory regulations, the treatment should be followed by the entity.
• (b) When the evaluation bases of non-monetary assets received, are
specified in the statutory regulations, the application of these bases is
acceptable provided that it does not result in reflecting the granted
assets in more than the fair value at the time of transfer.
97
• Note C (NAS # 15 and IAS # 32 & 39)
With the exception of the following requirement application of NAS No. 15 results into compliance with IAS
No. 32, 39:
The most current financial instruments in Iran are shares and the instruments like options, futures and
forward hardly exist in Iran. Accounting Standard 15, Accounting for Investments, permits using either the
fair value or cost for measuring current and long-term investments.
• Note D (NAS # 16 and IAS # 21)
With the exception of the following requirements, application of NAS No. 16 results into compliance with IAS
No. 21:
• (a) Exchange differences arising on foreign currency assets and liabilities of government entities
should be, according to substances of the Article 136 of the General Inspection Act approved in
Sharivar 1366 (August 1987), included in the account of translation reserve of foreign currency assets
and liabilities and classified as equity. If at the end of the financial period, the reserve account balance
is debit, the amount will be included in loss and gain of the period. Also, net exchange differences
which, in the order mentioned above, result in a change in exchange reserve during the period, should
be included in comprehensive income statement of the period.
• (b) Exchange differences arising on a monetary item that, in substance, forms part of an entity’s net
investment in a foreign entity should be classified as equity in the entity’s balance sheet and be
presented in comprehensive income statement until the disposal of the net investment. The
differences, at the time of investment disposal, should be taken into account of accumulated loss and
gain.
• (c) Exchange differences arising on a foreign currency liability accounted for as hedge of an entity’s
net investment in a foreign entity should be classified as equity in the entity’s balance sheet and be
included in comprehensive income statement until the disposal of net investment. The differences, at
the time of net investment disposal should be taken into account of accumulated loss and gain.
• (d) On the disposal of a foreign entity, the cumulative amount of the exchange differences on foreign
currency items which relate to that foreign entity and which have been recognized as equity, should be
taken in to account of accumulated loss and gain on disposal.
• Note E (NAS # 18 and IAS # 27)
With the exception of the requirements relating to the proper accounting treatment of the debit balance of
the minority interests account, application of NAS No. 18 results into compliance with IAS No. 27:
Profits or losses arising in a subsidiary should be apportioned between controlling and minority interests in
proportion to their respective interests held over the period. When losses attributable to the minority
interest result in debit balance, the controlling interest should be adjusted to the extent that it has any
commercial or legal obligations to provide finance that may not be recoverable in respect of the accumulated
losses attributable to the minority interest.
98
• Note F (NAS # 20 and IAS # 28)
With the exception of the following requirements, application of NAS No. 20 results
into compliance with IAS No. 28:
• (a) An investment in an associate that is included in the separate financial
statements of an investor that issues consolidated financial statements should be
carried at cost after deduction of perpetual impairment provision or revaluation
amount as an allowed alternative treatment, conforming to the investor’s
accounting policies on long-term investments, according to NAS No.15,
Accounting for Investments.
• (b) When the investor does not issue consolidated financial statements, the
amounts related to the associate should be presented under equity method as
following:
• (a) preparation and presentation of total financial statements, or
• (b) disclosure of supplementary information in explanatory notes of the
investor’s financial statements.
• Note G (NAS # 24)
There currently exists no specific International Accounting Standard relating to this
subject.
• Note H (NAS # 25 and IAS # 14)
With the exception of the following requirements, application of NAS No. 25, results
into compliance with IAS No. 14:
• (a) According to IAS No. 14, the dominant source and nature of an entity’s risks
and returns should govern whether its primary reporting format will be business
segments or geographical segments. Detailed information is normally presented
in the primary format and the secondary format contains condensed information.
NAS No.25 has excluded the application of the primary and secondary format in
order to narrow the extent of personal judgments and unnecessary technical
complexity.
• (b) According to IAS No. 14, segment revenue should include an entity’s share of
profits and losses of associates, joint ventures, or other investments accounted
for under the equity method. Such requirements do not exist in NAS No. 25.
99
 Note I (NAS # 26 and IAS # 41)
With the exception of the following requirements, application of
NAS No. 26 results into compliance with IAS No. 41, Agriculture:
 (a) According to IAS No. 41, Agriculture, all biological assets
should be measured at fair value less costs estimated on
disposal, unless the fair value is not reliably determinable.
However, according to this standard, with a reference to
environmental conditions of the country and lack of an active
market for biological productive assets, these assets should be
measured at cost, according to NAS No. 11, Accounting for
Tangible Fixed Assets.
 (b) According to IAS No. 41, Agriculture, a government grant
related to biological productive assets recognized at fair value
less costs estimated on disposal, is recognized as income (if
not conditioned) when it is collectible and (if conditioned)
when the conditions are satisfied. However, according to this
standard, all government grants related to biological
productive assets are recognized according to NAS No. 10,
Government Grants.
100
Accounting Standards -
Projects in Process
 Accounting for Life Insurance Activities.
 Amendments of Accounting Standards according
to the changes in International Accounting
Standards.
 Standard Interpretation.
 Accounting for Activities relating to Property Sale
and Development.
 Impairment of Assets.
 Financial Instruments.
 Accounting for Oil and Gas.
 Amendment of the Financial Reporting
Framework.
 Entities going into liquidation.
101
Auditing Standards - Due
Process
 Due process of Auditing Standard is as following:
 Deciding on a subject for research. The Auditing Standard Setting Committee decides on the topics to be
considered by Standard Setting Development.
 Preliminary studies. After deciding on the subject, necessary research and studies are commenced by the Advisors
of Standard Setting Department. In this phase, the standards of other countries like USA, UK, Australia and
Canada, International Auditing Standards, research carried out in relation to the subject, accounting practice in
Iran and the law and all issues relating to the subject are recognized, collected and studied. The result of this
phase is presentation of study reports.
 Deciding on necessity of a standard development. The Standard Setting Committee decides on the necessity of
development of a standard based on the result of preliminary studies.
 Preparation of primary draft. If the standard development is required by the Auditing Standard Setting Committee,
the advisory group prepare a primary draft based on study reports, after field studies and some meetings with
professionals and constituents. One of the main policies of Auditing Standard development is compliance with
International Auditing Standards. Therefore, concerning the subject on which there is an International Auditing
Standard, this International Auditing Standard is used as the main basis for the standard development. The
outcome of this phase is the primary standard draft.
 Development of standard draft. In this phase, the Auditing Standard Setting Committee presents the final
standard draft, after deep and broad reviews and necessary amendments. The outcome of this phase is the
standard draft.
 Public comment. For public comment, any standard draft is made available to the public by different ways like
publishing in professional journals, Internet (Organization Site), etc. Also, according to the subject nature, the
standard draft is separately sent to some authorities.
The opinions received in respect of the standard draft is concluded and presented to the Auditing Standard
Setting Committee by the Standard Setting Department. The Committee amends, if necessary, the standard draft
and after approval by the Technical Committee, the revised standard draft is presented to the Board of Executive
of the Organization.
 Ultimate approval. The final statement will be published when the final text of the standard is approved by the
Board of Executive and Board of Governor of the Organization. The board reviews the Auditing Standard and after
possible amendments approves and sends them to the Board of Governor of the Organization for the ultimate
approval. After approval by the Board of Governor, the final text of the Auditing standard is published and
becomes operative.
102
Auditing Standards - Due
Process
103
Auditing Standards - Projects
in Process
 Knowledge of the Business and Its Environment and Risk
Assessments of Material Alternations (315)
 Consideration of Environmental Matters in the Audit of
Financial Statements (1010)
 Audit Considerations relating to Entities Using Service
Organizations (402)
 Conceptual Framework
 Objective and General Principles Governing an Audit of
Financial Statements (200)
 Audit Procedures for Risks Estimated (330)
104
 IT Trends with Accounting Implications
 New Technologies
 * Information capture technology.
 * Access and monitoring technology.
 * Storage.
 * Telecommunications and inter-networking.
 * Pervasive computing.
 * XML standards.
 * Cryptography.
 * Automatic confirmation.
 * Automatic work papers.
 * System monitoring architectures.
 * Automatic inventory tracking.
 Measurement and Continuous Reporting
 Management Accounting: Core or Context?
 Updating the Reporting Function
 From Auditing to Continuous Assurance
105
What Will the Next 15 Years Bring?
The single greatest change agent facing
accounting in the next 15 years is technology.
Emerging trends in technology will fundamentally
alter the way in which both business and
accounting will be conducted. The measurement
and reporting of business transactions, long
considered a core competency of accountants,
will be challenged by the information economy,
forcing accountants to justify their role in
business. The foundations of the profession will
be eroded by the opposing demands of emerging
services and established values.
106
Auditing standard approved
Standard Title Standard Number
External Confirmations 5-50
Preface to International Auditing Standards 10
Objective and General Principles Governing an Audit of Financial Statements 20
Audit Engagements 21
Quality Control for Audit Work 22
Documentation 23
The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements 24
Consideration of Laws and Regulations in an Audit of Financial Statements 25
Planning 30
Knowledge of the Business 31
Audit Materiality 32
Risk Assessments and Internal Control 40
Audit Evidence 50
Initial Engagements - Opening Balances 51
Analytical Procedures 52
Audit Sampling and other Selective Testing Procedures 53
Audit of Accounting Estimates 54
Related Parties 55
Events after the Balance Sheet Date 56
Going Concern 57
Management Representations 58
Using the work of Another Auditor 60
Considering the work of Internal Auditing 61
Using the work of an Expert 62
The Independent Auditor’s Report 70
Comparatives 71
Other Information Included in the Reports Containing Audited Financial Statements 72
The Auditor’s Report on Special Purpose Audit 80
Engagements to Review Financial Statements 91
Engagements to Perform Agreed–Upon Procedures Regarding Financial Information 92
Engagements to Compile Financial Information 93
The Audit of Small Entities 105

107
Communications with Management 107
Examination of Prospective Financial Information 340

The prospects for accountants have never looked better:
There is a growing demand for the provision and analysis of
information in the new economy. But the value chain that
accountants used to dominate, that between the firm and
the long-term shareholder, is now on the margins of a wider
environment marked by day traders, continuous media
coverage, and rapid equity shifts. Accountants have yet to
come up with a strategy, much less products, for how they
will take a larger share of this marketplace. While
continuous reporting and assurance are promising, there is
no guarantee that the market will grant accountants a
monopoly on these products; their legally protected role as
auditors might actually be an artificial barrier to tackling
competitive threats head on. It makes little difference to
the emerging global economy whether its information
processing needs are carried out by professionals called
"accountants" or someone else. But that choice will clearly
determine the future of the profession.
108
Sources: Accounting in 2015 CPA Journal
By Michael Alles, Alexander Kogan, and Miklos A. Vasarhelyi
In Brief
109

History of Accounting Standards: By:Gholamhossein Davani Nysscpa, Iacpa, Iia, Cfe, Eaa, Ima, Aia

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History of Accounting Standards: By:Gholamhossein Davani Nysscpa, Iacpa, Iia, Cfe, Eaa, Ima, Aia

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History of Accounting

International Accounting Standards (IASs) were issued by the

The following institutes work together to create new and

1-The Financial Accounting Standards Board (FASB),

(IFRSs) has both a narrow and a broad meaning. Narrowly,

IFRSs refers to the new numbered series of pronouncements

that the IASB is issuing, as distinct from the International

Accounting Standards (IASs) series issued by its

predecessor. More broadly, IFRSs refers to the entire body of

IASB pronouncements, including standards and interpretations approved by

 International Financial Reporting Standards Preface to

Since 1973 the FASB has been the organization

 The essential elements of accreditation, which are education,

 The nature and extent of continuing professional education

• Formed in 2002 to oversee the audit of public companies that are

Generally Accepted Auditing Standards (GAAS). Established by the

Good corporate governance is essential to the effective operation of a free market,

• The Cad bury Report (1992), UK

• IAS 2 (revised 1993) Inventories

 IAS 32 (1995), Financial Instruments: Disclosure and Presentation

 IAS 12 (revised 1996), Income Taxes

 IAS 33 (1997) Earnings Per Share Revisions:

 IAS 1 (revised 1997) Presentation of Financial Statements

 IAS 34 (1998) Interim Financial Reporting

 IAS 16 (revised 1998) Property, Plant and Equipment

 Exposure Drafts Published:

 IAS 10 (revised 1999) Events After the Balance Sheet Date

• IAS 40 (2000), Investment Property Revisions:

• IAS 12 (revised 2000) Income Taxes

 IAS 41 (2001) Agriculture (approved by old IASC Board in December 2000).

 Preface to International Financial Reporting Standards (2002), replaced

 IFRS 1 (2003), First-time Adoption of International Financial Reporting Standards

 IAS 1 Presentation of Financial Statements

 IFRS 2 Share-based Payment

 IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

 SIC 12 Consolidation–Special Purpose Entities (Scope amendment)

Without limiting the direct communication of ideas to the

Antoine Bracchi, Member of the Public Interest

 IFRS 7 Financial Instruments: Disclosures Revisions:

 IFRIC 3 Emission Rights – Withdrawn

• IFRS 8 Operating Segments Revisions:

• Final Interpretations Published:

• IFRIC 8 Scope of IFRS 2

• IAS 23 Borrowing Costs

2 Cash Flow Statements 7 Note A

4 Accounting for Contingencies 10 ---

5 Accounting for Events After the Balance Sheet Date 10 ---

6 Reporting Financial Performance 8 ---

7 Accounting for Research & Development Costs 38 ---

8 Accounting For Inventories 2 ---

9 Accounting for Long-term Contracts 11 ---

10 Accounting for Government Grants 20 Note B

11 Accounting for Tangible Fixed Assets 16 ---

12 Related Party Disclosures 24 ---

13 Accounting for Borrowing Costs 23 ---

14 Presentation of Current Assets & Current Liabilities 1 ---

15 Accounting for Investments 32,39 Note C

16 Foreign Currency Translation 21 Note D

17 Accounting for Intangible Assets 38 ---

18 Consolidated Financial Statements and Accounting for Investments in Subsidiaries 27 Note E

19 Business Combinations 22 ---

20 Accounting for Investments in Associates 28 Note F

21 Accounting for Leases 17 ---