STRUCTURE OF IFRS / IASB

IFRS Foundation

• The IFRS Foundation is the organisation that

develops IFRS Standards for the public
interest. It has a staff of around 150 people
and has its main office in London and a
smaller Asia-Oceania office in Tokyo.
The IFRS Foundation’s Three-tier Structure
• The IFRS Foundation's three-tier structure
• The IFRS Foundation has a three-tier governance structure,
based on an independent standard-setting Board of experts
(International Accounting Standards Board), governed and
overseen by Trustees from around the world (IFRS Foundation
Trustees) who in turn are accountable to a monitoring board of
public authorities (IFRS Foundation Monitoring Board).

• The IFRS Advisory Council provides advice and counsel to the

Trustees and the Board, whilst the Board also consults
extensively with a range of other 
standing advisory bodies and consultative groups.
 The IFRS Foundation’s Three-tier Structure
I - Public accountability
• Monitoring Board
• The Monitoring Board is a group of capital market authorities and provides a formal link
between the Trustees and public authorities in order to enhance the public accountability
of the IFRS Foundation

II - Governance
• Trustees of the IFRS Foundation
• The Trustees of the IFRS Foundation are responsible for the governance and oversight of
the International Accounting Standards Board, including the Constitution and due process
for the development of the accounting standards

III - Independent standard-setting

• International Accounting Standards Board
• The International Accounting Standards Board (Board) is the independent standard-setting
body of the IFRS Foundation
• IFRS Interpretations Committee
• The interpretative body of the International Accounting Standards Board (Board), which
works with the Board in supporting the application of IFRS Standards.
The IFRS Structure diagram
Overview of the structure of the IFRS Foundation and IASB

GROUP ROLE FORMED

GOVERNANCE
Oversees the work of the
IASB, the structure, and 8 March 
IFRS Foundat
ion strategy, and has fund raising 2001
responsibility.
Trustee committee responsible
Due Process O for the Trustee's oversight
versight Com function under the IFRS 2006
mittee
  (DPOC) Foundation Constitution.
Oversees the IFRS Foundation
Trustees, participates in the 1 February 
Monitoring Bo Trustee nomination process, 2009
ard and approves appointments to
the Trustees.
Overview of the structure of the IFRS Foundation and IASB

GROUP ROLE FORMED

TECHNICAL
International A Sole responsibility for 1 April 2001 
ccounting Stan establishing  (1)
dards Board International Financial Reportin
 (IASB) g Standards
 (IFRSs).
IFRS Interpreta Develops interpretations for 1 April 2001 
tions Committe approval by the IASB, and (2)
e undertakes under tasks at the
 (2) request of the IASB
Working groups Expert task forces for individual Formed as
agenda projects needed
 Overview of the structure of the IFRS Foundation and IASB
GROUP ROLE FORMED
ADVISORY
Accounting Standard Advises on the technical standard-setting Announced 1
s Advisory Forum activities of the IASB February 2013
 (ASAF)
IFRS Advisory Council Advises the IASB and the IFRS Foundation 25 June 2001
 (3)
SPECIALISED ADVISORY GROUPS
Capital Markets Advisory Committee (4) 2003
Effects Analyses Consultative Group 2012
Emerging Economies Group 26, July 2011
Financial Crisis Advisory Group (jointly with FASB) 30 Dec 2008
Global Preparers Forum
IFRS Taxonomy Consultative Group 29, April 2014
Joint Transition Resource Group for Revenue Recognition June 2014
SME Implementation Group (SMEIG) 2010
Transition Resource Group for Impairment of Financial Instruments Aug. 2014
Transition Resource Group for IFRS 17 Sep. 2017
 The IFRS Foundation and the IASB
IFRS Foundation
• The International Accounting Standards Board (IASB) is
organised under an independent foundation named the
IFRS Foundation.
• The Foundation is a not-for-profit corporation which was
created under the laws of the State of Delaware, United
States of America, on 8 March 2001.
• The staff of the Foundation support the work of the IASB.
It has technical staff who analyse issues and help the IASB
(and its interpretations body the IFRS Interpretations
Committee) make technical decisions.
• Other staff provide support to adopting jurisdictions,
publications, education, communications (including the
website), investor relations, fundraising and administration.
 International Accounting Standards Board
The IASB is a technical standard-setting body

Membership: The IASB has up to 14 members.

Most are full-time, so that they commit all of their
time to paid employment as an IASB member. Up
to three can be part-time, but they are expected to
spend most of their time on IASB activities.

All members of the IASB are required to commit

themselves formally to acting in the public interest
in all matters.
 International Accounting Standards Board

Global balance:
Four members are appointed from each of Asia-
Oceania, Europe and the Americas and one
member from Africa.

One additional member can be appointed from

any area, subject to maintaining overall
geographical balance.
 International Accounting Standards Board
Qualifications of IASB members:

Members are selected to ensure that at all times the

IASB has the best available combination of technical
expertise and diversity of international business and
market experience to develop high quality, global
financial reporting standards.

Members include people who have experience as

auditors, preparers, users, academics and market and/or
financial regulators.
 International Accounting Standards Board

Term : The maximum term is 10 years – an initial

term of five years and a second term of three years,
or up to five years for the Chair and Vice-Chair.

Meetings: The IASB meets in public to discuss

technical matters, usually each month except
August.
 IFRS Interpretations Committee
• The IFRS Interpretations Committee is responsible for
developing Interpretations of IFRS Standards

Membership : The Committee has 14 members, appointed

because of their experience with IFRS Standards. They are not
paid, but the IFRS Foundation reimburses members for out-of-
pocket costs.
Meetings :The Committee meets in public to consider requests to
interpret IFRS Standards. It meets in every two months.

Interpretations :
If the Committee decides that an IFRS Standard is not clear and
that it should provide an interpretation of the requirements it either
develops an Interpretation or, in consultation with the IASB,
develops a narrow-scope amendment to the IFRS Standard.
 IFRS Interpretations Committee
The following steps involved in this process:
Deciding to develop an Interpretation, or amendment, means
that the Committee has taken the matter onto its agenda.
Interpretations :
The development of an Interpretation follows a similar
process to the development of an IFRS Standard.
They are developed in public meetings and the Draft
Interpretation is exposed for public comment.
Once the Interpretation has been completed it must be
ratified by the IASB before it can be issued.
Interpretations become part of IFRS Standards, so have the
same weight as any Standard.
 IFRS Interpretations Committee
Agenda decisions :

If the Committee decides that it need not, or cannot,

develop an Interpretation it publishes a tentative Agenda
Decision, explaining why it does not intend to develop an
Interpretation.
Once the Committee has considered feedback on the
tentative decision it can decide to finalise that decision, or
it could add the matter to its agenda.

The final agenda decisions sometimes contain an analysis

of the relevant standard that is helpful to preparers.
 DUE PROCESS
Due process
• The IASB and its Interpretations Committee
follow a comprehensive and open due process
built on the principles of transparency, full and
fair consultation and accountability.
• The IFRS Foundation Trustees, through its Due
Process Oversight Committee, is responsible for
overseeing all aspects of the due process
procedures of the IASB and the IFRS
Interpretations Committee, and for ensuring that
those procedures reflect best practice.
 DUE PROCESS
Transparency:
All technical discussions are held in public (and
usually via webcast) and the staff-prepared IASB
papers are publicly available.
The purpose of the staff papers is to ensure that the
IASB and IFRS Interpretations Committee have
sufficient information to be able to make decisions
based on the staff recommendations.
A final Standard or Interpretation must be
approved by at least 9 of the 14 members of the
IASB.
 DUE PROCESS
Full and fair consultation
The IASB must:
• Hold a public consultation on its technical work
programme every five years
• Evaluate all requests received for possible
interpretation or amendment of a Standard
• Debate all potential standard-setting proposals in
public meetings
• Expose for public comment any proposed new
Standard, amendment to a Standard or Interpretation
• Explain its rationale for proposals in a basis for
conclusions, and individual IASB members who
disagree publish their alternative views
 DUE PROCESS
Full and fair consultation
The IASB must:
• Consider all comment letters received on the
proposals, which are placed on the public record,
in a timely manner
• Consider whether the proposals should be
exposed again
• Consult the Advisory Council on the technical
programme, major projects, project proposals and
work priorities
• Ratify any Interpretations developed by the IFRS
Interpretations Committee
 DUE PROCESS
Full and fair consultation
The IASB must:
• Additionally, the IASB must undertake the
following steps, or explain why they do not
consider them to be necessary for a specific project:
• Publish a discussion document (for example, a DP)
before specific proposals are developed
• Establish a consultative group or other types of
specialist advisory group
• Hold public hearings
• Undertake fieldwork
 DUE PROCESS

Accountability :
An effects analysis and basis for conclusions
(and dissenting views) are published with each
new Standard.

The IASB is committed to conducting post-

implementation reviews of each new Standard
or major amendment of an existing Standard.
 CONSULTATIVE BODIES

Advisory groups :
The IFRS Advisory Council meets twice a year.
Its members give advice to the IASB on its work
programme, inform the IASB of their views on
major standard-setting projects and give other
advice to the IASB or the Trustees.
The Advisory Council has at least 30 members and
they are appointed by the Trustees and are
organisations and individuals with an interest in
international financial reporting from a broad range
of geographical and functional backgrounds.
 CONSULTATIVE BODIES

The Accounting Standards Advisory

Forum (ASAF) meets with the IASB four
times a year, in a public meeting, to discuss
technical topics.

It comprises a standard-setter from Africa,

three from each of the Americas, Asia-
Oceania and Europe and two from any area
of the world at large, subject to maintaining
an overall geographical balance.
 CONSULTATIVE BODIES

Standing consultative groups :

Capital Markets Advisory Committee (users),
Global Preparers Forum (preparers),
Emerging Economies Group,
Islamic Finance Consultative Group,
IFRS Taxonomy Consultative Group,
SME Implementation Group,
World Standard-setters Conference.
 CONSULTATIVE BODIES
• Transition Resource Groups:
Created for specific new Standards
(Impairment of Financial Instruments,
Insurance Contracts and Revenue
Recognition).

• Project consultative groups:

Rate Regulation, Management Commentary
 Accounting standards by different nations
• This standard is adopted in whole, or in large part, by
many countries. It is acceptable in the U.S. (for a firm
located outside of the U.S.) to report in this widely
accepted format.
• Accounting standards by nation
• Canada - Generally Accepted Accounting Principles
• China - Chinese Accounting Standards
• France - Generally Accepted Accounting Practice (Plan
Comptable Général)
• Germany - Generally Accepted Accounting Practice (
Grundsätze ordnungsmäßiger Buchführung)
 Accounting standards by different nations
• India - Indian Accounting Standards
• Luxembourg - Luxembourg Generally Accepted Accounting Prin
ciples (
Lux GAAP)
• Nepal - Nepal Financial Reporting Standards
• Russia - Russian GAAP
• Switzerland - Swiss GAAP FER (Fachempfehlungen zur
Rechnungslegung)
• United Kingdom - Generally Accepted Accounting Practice (UK)
• United States - 
Generally Accepted Accounting Principles (United States)
 Domestic firms typically report in this format. Foreign firms
that trade in the U.S. typically report in IFRS format.
 IFRS ADOPTION IN INDIA

• India
• The Institute of Chartered Accountants of India
(ICAI) has announced that IFRS will be
mandatory in India for financial statements for
the periods beginning on or after 1 April 2016
in a phased manner. There is a roadmap issued
by MCA for adoption of IFRS.
• Reserve Bank of India has stated that financial
statements of banks need to be IFRS-compliant
for periods beginning on or after 1 April 2011.
 IFRS ADOPTION IN INDIA
\India
• The ICAI has also stated that IFRS will be applied to companies above INR 1000
crore (INR 10 billion) from April 2011. Phase wise applicability details for
different companies in India:
Phase 1: Opening balance sheet as of 1 April 2011*
i. Companies which are part of NSE Index – Nifty 50
ii. Companies which are part of BSE Index – Sensex 30
• a. Companies whose shares or other securities are listed on a stock exchange
outside India
• b. Companies, whether listed or not, having net worth of more than INR 1000 crore
(INR 10 billion)
Phase 2: Opening balance sheet as of 1 April 2012*
• Companies not covered in phase 1 and having net worth exceeding INR 500 crore
(INR 5 billion)
Phase 3: Opening balance sheet as of 1 April 2014*
• Listed companies not covered in the earlier phases * If the financial year of a
company commences at a date other than 1 April, then it shall prepare its opening
balance sheet at the commencement of immediately following financial year.
 IFRS ADOPTION IN INDIA

• On 22 January 2010, the Ministry of Corporate Affairs issued the

road map for transition to IFRS. It is clear that India has deferred
transition to IFRS by a year.
• In the first phase, companies included in Nifty 50 or BSE Sensex,
and companies whose securities are listed on stock exchanges
outside India and all other companies having net worth of INR
10 billion will prepare and present financial statements using Indian
Accounting Standards converged with IFRS.
• According to the press note issued by the government, those
companies will convert their first balance sheet as of 1 April 2011,
applying accounting standards convergent with IFRS if the
accounting year ends on 31 March.
• This implies that the transition date will be 1 April 2011.
According to the earlier plan, the transition date was fixed at 1 April
2010.
 IFRS ADOPTION IN INDIA

• The press note does not clarify whether the full set of
financial statements for the year 2011–12 will be
prepared by applying accounting standards convergent
with IFRS.
• The deferment of the transition may make companies
happy, but it will undermine India's position. Presumably,
lack of preparedness of Indian companies has led to the
decision to defer the adoption of IFRS for a year.
• This is unfortunate that India, which boasts for its IT and
accounting skills, could not prepare itself for the
transition to IFRS over last four years. But that might be
the ground reality.
 IFRS ADOPTION IN INDIA

Transition in phases
Companies, whether listed or not, having net worth of more than INR
5 billion will convert their opening balance sheet as of 1 April
2013. Listed companies having net worth of INR 5 billion or less
will convert their opening balance sheet as of 1 April 2014. Un-
listed companies having net worth of Rs5 billion or less will
continue to apply existing accounting standards, which might be
modified from time to time.
Transition to IFRS in phases is a smart move. The transition cost for
smaller companies will be much lower because large companies
will bear the initial cost of learning and smaller companies will not
be required to reinvent the wheel. However, this will happen only if
a significant number of large companies engage Indian accounting
firms to provide them support in their transition to IFRS.
 IFRS ADOPTION IN INDIA

• Transition in phases

If, most large companies, which will comply with Indian accounting
standards convergent with IFRS in the first phase, choose one of the
international firms, Indian accounting firms and smaller companies will
not benefit from the learning in the first phase of the transition to IFRS.

• It is likely that international firms will protect their learning to retain

their competitive advantage. Therefore, it is for the benefit of the
country that each company makes judicious choice of the accounting
firm as its partner without limiting its choice to international accounting
firms. Public sector companies should take the lead and the Institute of
Chartered Accountants of India (ICAI) should develop a clear strategy
to diffuse the learning.
 IFRS ADOPTION IN INDIA

Size of companies
The government has decided to measure the size of companies in terms of
net worth. This is not the ideal unit to measure the size of a company. Net
worth in the balance sheet is determined by accounting principles and
methods. Therefore, it does not include the value of intangible assets.
Moreover, as most assets and liabilities are measured at historical cost, the
net worth does not reflect the current value of those assets and liabilities.
Market capitalisation is a better measure of the size of a company. But it
is difficult to estimate market capitalisation or fundamental value of
unlisted companies.
This might be the reason that the government has decided to use 'net worth'
to measure size of companies. Some companies, which are large in terms
of fundamental value or which intend to attract foreign capital, might
prefer to use Indian accounting standards convergent with IFRS earlier
than required under the road map presented by the government. The
government should provide that choice. [56]
 Global standardization and IFRS

• Many countries use or are converging on the IFRS that were

established and are maintained by the IASB.
• In some countries, local accounting principles are applied for
regular companies but listed or large companies must
conform to IFRS, so statutory reporting is comparable
internationally.
• All listed and grouped EU companies have been required to
use IFRS since 2005, Canada moved in 2009,Taiwan in
2013,and other countries are adopting local versions.

• In the United States, while "... the SEC published a statement

of continued support for a single set of high-quality, globally
accepted accounting standards, and acknowledged that IFRS
is best positioned to serve this role..."