THE

DEVELOPMENT
OF ACCOUNTING
STANDARDS
.
 HELLO STUDENTS, SIT
BACK AND RELAX WHILE
MY TEAM TAKES YOU
THROUGH THIS TOPIC
BY THE END OF THIS
LESSON, YOU SHOULD…..
HAVE KEEN KNOWLEDGE ON THE
DEVELOPMENT OF ACCOUNTING STANDARDS
KNOW THE NATURE AND CHARACTERISTICS
OF SMEs
KNOW THE ROLE OF IMPORTANT
ORGANIZATIONS AS IT RELATES TO THE
DEVELOPMENT OF ACCOUNTING
KNOW KEY TERMS RELATING TO THE
DEVELOPMENT OF ACCOUNTING
FIRSTLY, WHAT EVEN
ARE ACCOUNTING
STANDARDS ????
 AN ACCOUNTING STANDARD IS A DOCUMENT PUBLISHED BY A BODY THAT MAKES RULES
DESCRIBING HOW ACCOUNTING TRANSACTIONS SHOULD BE RECORDED AND REPORTED. THE
FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) AND THE INTERNATIONAL ACCOUNTING
STANDARDS BOARD ARE THE ORGANIZATIONS THAT PUBLISH ACCOUNTING STANDARDS MOST
FREQUENTLY (IASB). AN IMPORTANT REQUIREMENT OF LENDERS, CREDITORS, AND
INVESTORS IS THAT AN ORGANIZATION'S FINANCIAL STATEMENTS BE AUDITED BY AN
OUTSIDE AUDITOR, AND THIS REQUIREMENT AN BE MET, WHEN ACCOUNTING STANDARDS ARE
FOLLOWED.ACCOUNTING STANDARDS COVER SEVERAL TOPICS INCLUDING GENERAL
PRINCIPLES, PRESENTATION, ASSETS, LIABILITIES, EQUITY, REVENUE, EXPENSES, LARGE
TRANSACTIONS, AND INDUSTRY-SPECIFIC CONSIDERATIONS.

IN SIMPLER TERMS…. ACCOUNTING STANDARDS

ARE RULES AND GUIDELINES SET UP BY GOVERNING
BODIES, LIKE FASB AND IASB, TO KEEP ACCOUNTING
PRACTICES CONSISTENT AND UNDERSTANDABLE
ACROSS ALL COMPANIES AND INDUSTRIES.
NOW, LET US LOOK A BRIEF
HISTORY OF ACCOUNTING
STANDARDS.
THE CONCEPT OF UNIFIED INTERNATIONAL ACCOUNTING
STANDARDS IS NOT NEW. IN RESPONSE TO POST-WORLD
WAR II ECONOMIC INTEGRATION AND ASSOCIATED
INCREASES IN CROSS-BORDER CAPITAL FLOWS, THE IDEA
OF CONVERGENCE FIRST EMERGED IN THE LATE 1950S.

BY THE 1990S, THE NOTION OF HARMONIZATION WAS

REPLACED BY THE CONCEPT OF CONVERGENCE—THE
DEVELOPMENT OF A UNIFIED SET OF HIGH-QUALITY,
INTERNATIONAL ACCOUNTING STANDARDS THAT WOULD
BE USED IN AT LEAST ALL MAJOR CAPITAL MARKETS.

THE FIRST INTERNATIONAL STANDARD-SETTING BODY WAS THE

INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE,
ESTABLISHED IN 1973. IT WAS REORGANIZED IN 2001 TO BECOME
THE INTERNATIONAL ACCOUNTING STANDARDS BOARD, AN
INDEPENDENT BODY THAT DEVELOPS INTERNATIONAL
STANDARDS (IASB). INTERNATIONAL STANDARDS ARE NOW
INCREASINGLY USED. AS OF 2013, THE IASB'S INTERNATIONAL
FINANCIAL REPORTING STANDARDS (IFRSS) OR LOCAL
VARIATIONS OF THEM WERE EITHER REQUIRED OR PERMITTED
NOW, LET US DISCUSS
SMALL AND MEDIUM-
SIZED ENTITIES.
AKA… SMEs
SMALL AND MID-SIZED ENTERPRISES ARE BUSINESSES
THAT MAINTAIN REVENUES, ASSETS OR A NUMBER OF
EMPLOYEES BELOW A CERTAIN THRESHOLD. EACH
COUNTRY HAS ITS OWN DEFINITION OF WHAT
CONSTITUTES A SMALL AND MEDIUM SIZED
ENTERPRISE. CERTAIN SIZE CRITERIA MUST BE MET
AND OCCASIONALLY THE INDUSTRY IN WHICH THE
COMPANY OPERATES IS TAKEN INTO ACCOUNT AS
WELL.
CHARACTERISTICS OF SMEs

 SMALL AND MEDIUM ENTERPRISES ARE BUSINESSES

THAT HAVE REVENUES, ASSETS, OR A NUMBER OF
EMPLOYEES BELOW A CERTAIN THRESHOLD. 

 EACH COUNTRY HAS ITS OWN DEFINITION OF WHAT

CONSTITUTES A SMALL AND MEDIUM-SIZED
ENTERPRISE.

 EACH COUNTRY MAY ALSO SET DIFFERENT

GUIDELINES ACROSS INDUSTRIES TO DEFINE WHAT A
SMALL BUSINESS IS ACROSS SECTORS. 

 SMES PLAY AN IMPORTANT ROLE IN THE ECONOMY,

EMPLOYING VAST NUMBERS OF PEOPLE AND HELPING
TO SHAPE INNOVATION. 

 GOVERNMENTS REGULARLY OFFER INCENTIVES,

SMALL AND MID-SIZED ENTERPRISES CAN
EXIST IN ALMOST ANY INDUSTRY BUT ARE
MORE LIKELY TO RESIDE WITHIN INDUSTRIES
REQUIRING FEWER EMPLOYEES AND
REQUIRING SMALLER UPFRONT CAPITAL
INVESTMENTS. 
 https://www.fasb.org/page/PageContent?
pageId=/international/
BEFORE WE GO ANY
briefhistory.html&bcpath=ff&isStaticPage=true

FURTHER, HERE ARE SOME

EXAMPLES OF SMEs
NUMBER OF EMPLOYEES REVENUE

IN REGARD TO JAMAICA, THERE IS NO

 AN SME IS AN ENTERPRISE COMMON DEFINITION, HOWEVER, THERE
ARE GUIDELINES AS TO WHAT IS ACCEPTED
THAT EMPLOYS LESS THAN AS A SME:
250 PEOPLE ON AVERAGE.
SMES CONTRIBUTE TO A  MICRO ENTERPRISES ARE GENERALLY
DEFINED AS HAVING ONE TO THREE
COUNTRY'S DEVELOPMENT EMPLOYEES AND/OR AN ANNUAL
BECAUSE THEY PROVIDE TURNOVER OF LESS THAN JMS$10,000,000
MORE JOBS WHICH RESULT IN  SMALL ENTERPRISES ARE DESCRIBED AS
A DECREASE IN THE HAVING BETWEEN FOUR TO TEN
UNEMPLOYMENT RATE AS EMPLOYEES AND/OR AN ANNUAL
TURNOVER OF OVER JMS$10,000,000 BUT
WELL AS POVERTY. LESS THAN JMD$40,000,000

 MEDIUM ENTERPRISES ARE CATEGORIZED

 IN DEVELOPING COUNTRIES
SMEs GENERATE UP TO 90%
JOBS AND ALSO,
APPROXIMATELY 55% GDP
AS HAVING BETWEEN ELEVEN TO FIFTY
EMPLOYEES AND/OR AN ANNUAL
TURNOVER THAT FALLS BETWEEN
JMD$40,000,000 AND JMD$150,000,000. 
 NOW, LET US LOOK AT SOME
IMPORTANT ORGANIZATIONS
DEALING WITH ACCOUNTING
STANDARDS
 THE INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE (IASC)-
WAS A LONDON-BASED PRIVATE ORGANIZATION WHOSE GOAL WAS TO DEVELOP AND
PROMULGATE NEW ACCOUNTING PRINCIPLES REGARDING FINANCIAL REPORTING. CREATED
IN 1973, IT SOUGHT TO FORMULATE HIGH STANDARDS WHICH WOULD BE USED, NOT ONLY ON
A NATIONAL LEVEL, BUT WOULD BE ACCEPTED INTERNATIONALLY. THIS WAY, BUSINESSES
COULD PUBLISH THEIR FINANCIAL STATEMENTS ON THE GLOBAL SCALE AND THEY WOULD
BE UNDERSTOOD AND USEFUL TO STAKEHOLDERS ACROSS THE WORLD.

INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)-

IN APRIL OF 2001, THE IASC BECAME THE IASB. THIS IS ALSO A PRIVATE BUSINESS THAT IS
CONCERNED WITH THE FORMULATION OF AND APPROVAL OF THE INTERNATIONAL 
FINANCIAL REPORTING STANDARDS (IFRSS)  AND TRY TO PROMULGATE THEM FOR USE IN
FIRMS WORLDWIDE. (INTEGRATION)
  FINANCIAL ACCOUNTING STANDARDS BOARD (FASB)
THE FASB IS A US-BASED INSTITUTION THAT IS RESPONSIBLE FOR DEVELOPING AND ISSUING
FINANCIAL ACCOUNTING PRINCIPLES, FOLLOWING THE GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES. THESE DEVELOPED STANDARDS ARE USED BY US ACCOUNTING FIRMS AND CERTIFIED
PUBLIC ACCOUNTANTS FOR BOTH ACCOUNTING AND FINANCIAL REPORTING.

INSTITUTE OF CHARTERED ACCOUNTANTS OF JAMAICA (ICAJ)

THE IACJ’S VISION STATES “THE ICAJ IS COMMITTED TO BEING A COHESIVE NATIONAL BODY OF TRUSTED AND
INFLUENTIAL PROFESSIONALS, THAT SEEKS TO REGULATE AND ADVANCE THE ACCOUNTANCY PROFESSION,
CONSISTENT WITH WORLD STANDARDS, FOR THE BENEFIT OF ITS MEMBERS, ITS STUDENTS AND ITS PUBLICS
AND, THROUGH CREATIVE THOUGHT LEADERSHIP, ENCOURAGES NATIONAL DEVELOPMENT AND THE
ADVANCEMENT OF POSITIVE GLOBAL CHANGES .”
INSTITUTE OF CHARTERED ACCOUNTANTS OF THE CARIBBEAN (ICAC)

THE ICAC HAS EXPANDED TO BECOME THE PREEMINENT REGIONAL

ORGANIZATION DEVOTED TO ADVANCING THE INTERESTS OF
ACCOUNTANTS AND PROFESSIONALS IN THE FINANCE INDUSTRY
THROUGHOUT THE CARIBBEAN AND PARTS OF LATIN AMERICA, WITH A
NETWORK OF OVER 4,000 PROFESSIONALS.

THE ICAC OFFERES A FORUM FOR THE DEVELOPMENT OF THE

ACCOUNTING PROFESSION IN THE AREA AND ENCOURAGES THE USE OF
BEST PRACTICES, STANDARDS THAT ARE ACCEPTED INTERNATIONALLY,
THOUGHT LEADERSHIP, RESEARCH, AND ONGOING PROFESSIONAL
DEVELOPMENT.
 MEMBER
 THE BAHAMAS COUNTRIES
INSTITUTE OFACCOUNTANTS
OF CHARTERED ICAC
 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF
BARBADOS
 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF BELIZE
 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF THE
EASTERN CARIBBEAN
 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF GUYANA
 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF JAMAICA
 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF TRINIDAD
& TOBAGO
PHEW... LET US TAKE A
BREATHER... WHAT
HAVE YOU LEARNT SO
FAR?
NOW, LET US LEARN SOME
VERY IMPORTANT TERMS
INTERNATIONAL ACCOUNTING
STANDARDS (IAS) ARE A SET OF RULES
FOR FINANCIAL STATEMENTS THAT
WERE REPLACED IN 2001 BY
INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) AND
HAVE SUBSEQUENTLY BEEN ADOPTED
BY MOST MAJOR FINANCIAL MARKETS
AROUND THE WORLD.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

STANDARDS THAT ENCOMPASS THE SUBTLETIES,

DIFFICULTIES, AND LEGALITIES OF CORPORATE
AND COMPANY ACCOUNTING. THE FINANCIAL
ACCOUNTING STANDARDS BOARD (FASB) USES
GAAP AS THE BASIS FOR ITS SET OF APPROVED
ACCOUNTING METHODS AND PRACTICES IN
ORDER TO COVER EVERYTHING EXTENSIVELY.

THERE ARE FOUR MAIN PRINCIPLES: THE COST

PRINCIPLE, THE REVENUES PRINCIPLE, THE
MATCHING PRINCIPLE, THE DISCLOSURE
PRINCIPLE
INTERNATIONAL ACCOUNTING
STANDARDS (IAS) ARE A SET OF RULES
FOR FINANCIAL STATEMENTS THAT
WERE REPLACED IN 2001 BY
INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS) AND
HAVE SUBSEQUENTLY BEEN ADOPTED
BY MOST MAJOR FINANCIAL MARKETS
AROUND THE WORLD.
THE INTERNATIONAL FINANCIAL REPORTING RULES (IFRS)
ARE A COLLECTION OF ACCOUNTING STANDARDS THAT
GOVERN HOW SPECIFIC TYPES OF TRANSACTIONS AND
EVENTS ARE RECORDED IN FINANCIAL STATEMENTS. THE
INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)
CREATED AND UPHOLDS THEM.

THERE ARE FOUR BASIC PRINCIPLES OF FINANCIAL

ACCOUNTING MEASUREMENT: OBJECTIVITY, MATCHING,
REVENUE RECOGNITION, CONSISTENCY.
EVER HEARD THE TERM ‘DUE
PROCESS’?, WELL... LETS TALK
ABOUT IT
THE PROCESSES AND PROTECTIONS THAT LIMIT
ADMINISTRATIVE DECISION-MAKING ARE
REFERRED TO AS DUE PROCESS. IT IS THE WAY
THROUGH WHICH WE ENSURE THAT
ADMINISTRATIVE AND JUDICIAL ENTITIES
EXERCISE AUTHORITY ETHICALLY AND SUPPORT
CONSISTENT APPLICATION OF THE PRINCIPLES OF
THE IFRS.
LET’S NOT FORGET, THE
STANDARD SETTING
PROCESS…
 SETTING THE PLANNING THE
AGENDA  PROJECT

DEVELOPING DEVELOPING
AND PUBLISHING AND PUBLISHING
THE DISCUSSION THE EXPOSURE
PAPER DRAFT (ED)

DEVELOPING CONSULTATION
AND PUBLISHING AND
THE STANDARD EVALUATION
 ORGANIZATIONS INVOLVED IN THE STANDARD SETTING
PROCESS
INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) -
LONDON, UNITED KINGDOM

FINANCIAL ACCOUNTING STANDARDS BOARD - NORWALK,

CONNECTICUT, UNITED STATES

AMERICAN INSTITUTE OF CERTIFIED PUBLIC

ACCOUNTANTS (AICPA) - DURHAM, NORTH CAROLINA,
UNITED STATES

FEDERAL ACCOUNTING STANDARDS ADVISORY BOARD

(FASAB) - WASHINGTON, D.C., UNITED STATES
 ACCOUNTING STANDARDS ARE
STILL RECENTLY BEING
An example of an accounting standard that has been CHANGED, LET US TAKE A LOOK
recently changed and the reason/s  for the change. Choose
a standard based on a concept with which you are familiar. AT AN EXAMPLE