Accounting Standards

Accounting Standards

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Regulation of accounting practicesAccounting standards set out the rules for accounting in a country and say what should be reported in a companys accounts in that territory. Their purpose is to ensure that consistent approaches to accounting are adopted nationally.They minimise the risk of misstatement in accounts and help investors make decisions by ensuring they can get comparable information. Accounting standards, as laid down by a countrys law, apply to all companies registered within its territory.

Why are standards needed? The increased globalisation of corporations and finance has spurred a trend to harmonize accounting standards between countries. This move aims to enhance consistency and in turn ease the process of comparison of performance between companies registered in different territories. Accounting standards are needed so that financial statements will fairly and consistently describe financial performance. Without standards, users of financial statements would need to learn the accounting rules of each company, and comparisons between companies would be difficult.

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Standard Setting Bodies

Accounting standard setting bodies are national or international organisations that have been delegated responsibility for setting Generally Accepted Accounting Principles by statute in a country or jurisdiction.

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Standard Setting

JamaicaPublic Accountancy ActCompanies Act

International Standard-Setting

The IASB (International Accounting Standards Board)The IASB is the independent standard-setting body of the IFRS Foundation. Its members (currently 15 full-time members) are responsible for the development and publication of IFRSs.

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Standard-Setting (Contd)

The International Accounting Standards Board issues IFRS.The International Federation of Accountants (with its International Public Sector Accounting Standards Board IPSASB) issues IPSAS for Government/Public entities accounting.

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Standard Setting ProcessHow we develop IFRSs?International Financial Reporting Standards (IFRSs) are developed through an international consultation process, the "due process",which involves interested individuals and organizations from around the world.

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Standard Setting Process (Contd)The due process comprises six stages, with the Trustees having the opportunity to ensure compliance at various points throughout:Setting the agendaPlanning the projectDeveloping and publishing the discussion paperDeveloping and publishing the exposure draftDeveloping and publishing the standardAfter the standard is issued

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1. Setting the AgendaThe IASB, by developing high quality accounting standards, seeks to address a demand for better-quality information that is of value to all users of financial statements. Betterquality information will also be of value to preparers of financial statements.The IASB evaluates the merits of adding a potential item to its agenda mainly by reference to the needs of investors.The IASB considers: the relevance to users of the information and the reliability of information that could be providedwhether existing guidance availablethe possibility of increasing convergencethe quality of the standard to be developed.resource constraints.

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Setting the AgendaTo help the IASB in considering its future agenda, its staff are asked to identify, review and raise issues that might warrant the IASBs attention.New issues may also arise from a change in the IASBs conceptual framework. In addition, the IASB raises and discusses potential agenda items in the light of comments from other standard-setters and other interested parties, theIFRS Advisory Counciland the IFRS Interpretations Committee, andstaff research and other recommendations. The IASB receives requests from constituents to interpret, review or amend existing publications. The staff consider all such requests, summarize major or common issues raised, and present them to the IASB from time to time as candidates for when the IASB is next considering its agenda.

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2. Project planningWhen adding an item to its active agenda, the IASB also decides whether to:conduct the project alone, or jointly with another standard-setter.Similar due process is followed under both approaches.After considering the nature of the issues and the level of interest among constituents, the IASB may establish a working group at this stage.

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2. Project Planning (Contd)A team is selected for the project by the two most senior members of the technical staff:The Director of Technical Activities; and The Director of Research.The project manager draws up a project plan under the supervision of those Directors. The team may also include members of staff from other accounting standard-setters, as deemed appropriate by the IASB.

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3. Development and Publication of Discussion PaperAlthough a discussion paper is not mandatory, the IASB normally publishesit as its first publication on any major new topic to explain the issue and solicit earlycomment from constituents.If the IASB decides to omit this step, it will state why.Typically, a discussion paper includes:a comprehensive overview of the issue;possible approaches in addressing the issue;the preliminary views of its authors or the IASB; and an invitation to comment.

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4. Development and publication of an exposure draftPublication of an exposure draft is a mandatory step in due process. Irrespective of whether the IASB has published a discussion paper, an exposure draft is the IASBs main vehicle for consulting the public. Unlike a discussion paper, an exposure draft sets out a specific proposal in the form of a proposed standard (or amendment to an existing standard)

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4. Development and publication of an exposure draft (Contd)The development of an exposure draft begins with the IASB considering: issues on the basis of staff research and Recommendations; comments received on any discussion paper; and suggestions made by the IFRS Advisory Council, working groups and accounting standard-setters, and arising from public education sessions.

After resolving issues at its meetings, the IASB instructs the staff to draft the exposure draft. When the draft has been completed, and the IASB hasballoted on it, the IASB publishes it for public comment.

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5. Development and publication of an IFRS standardThe development of an IFRS is carried out during IASB meetings, when the IASB considers the comments received on the exposure draft, the IASB considers whether it should expose its revised proposals for public comment, for example by publishing a second exposure draft.

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5. Development and publication of an IFRS standard (Contd)In considering the need for re-exposure, the IASB:identifies substantial issues that emerged during thecomment period on the exposure draft that it had not previously considered assesses the evidence that it has consideredevaluates whether it has sufficiently understood the issues and actively sought the views of constituentsconsiders whether the various viewpoints were aired in the exposure draft and adequately discussed and reviewed in the basis for conclusions.

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6. Procedures after an IFRS is issuedAfter an IFRS is issued, the staff and the IASB members hold regular meetings with interested parties, including other standard-setting bodies, to help understand unanticipated issues related to the practical implementation and potential impact of its proposals.TheIFRS Foundation also fosters educational activities to ensure consistency in the application of IFRSs.

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After a suitable time, the IASB may consider initiating studies in the light of:its review of the IFRSs application,changes in the financial reporting environment and regulatory requirements, andcomments by the IFRS Advisory Council, the IFRS Interpretations Committee, standard-setters and constituents about the quality of the IFRS.Those studies may result in items being added to the IASBs agenda.6. Procedures after an IFRS is issued (Contd)

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Professional Accounting BodiesThis is a list of the various professional bodies and organizations that seek to provide regulation and oversight over individuals and firms operating in the accountancy industry.

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Professional Accounting BodiesProfessional bodies represent the interests of their members by lobbying governments, and provide the framework for self-regulations where this is permitted by statue.Professional bodies are also responsible for administering training and examinations for students and members.

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Professional Accounting Bodies-CGAThe Certified General Accountants Association of Canada (CGA-Canada) is the umbrella organization for Certified General Accountants. CGA-Canada represents 73,000 members and students living and working in Canada, and more than 80 countries around the world.

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CGACGA-Canada contributes to national and international accounting standard setting through co-operative professional relationships with other accounting bodies, represents the interests of the public and CGAs, and serves as an advocate for accounting professional excellence. To ensure CGAs maintain a reputation for excellence, CGA-Canada regularly reviews its professional standards. Adherence to high professional and practice standards ensures that CGAs continue to offer superior professional services worthy of the publics trust.

Look at examples of CGA guidelines24

Professional Accounting Bodies - AICPA

American Institute of Certified Public Accountants (AICPA) is the national professional organization of Certified Public Accountants (CPAs) in the United States, with more than 370,000 CPA members in 128 countries in business and industry, public practice, government, education, student affiliates and international associates. It sets ethical standards for the profession and U.S. auditing standards for audits of private companies, non-profit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination.

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Professional Accounting Bodies-ICACICAC is the internationally recognized body for the accountancy profession in the Caribbean, with an expanding influence in the region. It regulates the profession and promotes the highest standards of professional and ethical conduct. Through thought leadership and the provision of research, CPD (Continuing Professional development) and other services, it adds value to its members and the wider community. The Institute of Chartered Accountants of the Caribbean is governed by a Board of Directors. Each territorial Institute appoints a director and an alternate to serve on the ICAC Board for a period of two years.

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Professional Accounting Bodies-ICACThe objectives of the ICAC are to: Promote internationally acceptable standards of best practice within the region. Foster a strong, cohesive and self regulated regional Accountancy profession. Implement and coordinate a regional monitoring programme in collaboration with reputable providers. Promote an institutional framework under the umbrella of territorial institutes within which individual Accountants may associate and participate for mutual professional and fraternal benefit. standardize the qualification entry requirement and rules of professional conduct among member Institutes and Provide leadership on emerging issues as they affect the accounting profession in the region.

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Professional Accounting Bodies in the CaribbeanICATT - The Institute of Chartered Accountants of Trinidad & TobagoICAB - The Institute of Chartered Accountants of BarbadosICAJ - The Institute of Chartered Accountants of Jamaica

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IPSASBThe International Public Sector Accounting Standards Board (IPSASB) develops high-quality international public sector accounting standards (IPSASBs), guidance, and resources for use by public sector entities around the world for preparation of general purpose financial statements. They issue and promote benchmark guidance and facilitate the exchange of information among accountants and those who work in the public sector and those who rely on its work.

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IPSASBThe standards issued by the IPSAB are based on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

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