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History of Accounting Standards

By:Gholamhossein DavaniNYSSCPA,IACPA,IIA,CFE,EAA,IMA,AI

AManaging Partner f Dayarayan Auditing & Financial Services Firm( RSM member in

Iran)

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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.

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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,"

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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)

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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.

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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

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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

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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.

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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.

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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.

Who Sets Accounting Standards in USA?

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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.

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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.

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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.]

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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

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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 PricesSuperseded 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.

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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

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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

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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.

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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.

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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).

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IASB, IASCF, and IASC DefinedThe 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.

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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.

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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.

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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

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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.

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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 the revised hierarchy:

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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

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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

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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

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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

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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

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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

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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)

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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.

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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.

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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.

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International Accounting Standards Committee (IASC) 1973-20001973 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

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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

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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.

Exposure Drafts Published: • E4 Depreciation Accounting • E5 Information to be Disclosed in Financial Statements Final Standards Published: • IAS 1 (1975) Disclosure of Accounting Policies • IAS 2 (1975) Valuation and Presentation of Inventories

in the Context of the Historical Cost System

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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. Exposure Drafts Published: • 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 Final Standards Published: • IAS 3 (1976) Consolidated Financial Statements • IAS 4 (1976) Depreciation Accounting • IAS 5 (1976) Information to be Disclosed in Financial

Statements

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1977Events • 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. Exposure Drafts Published: • 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 Final Standards Published: • IAS 6 (1977) Accounting Responses to Changing Prices • IAS 7 (1977) Statement of Changes in Financial Position

49

1978Events • 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.

Exposure Drafts Published: • E13 Accounting for Taxes on Income • E14 Current Assets and Current Liabilities Final Standards Published: • 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

50

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. Exposure Drafts Published: • None Final Standards Published: • 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

51

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

52

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. Exposure Drafts Published: E20 Revenue Recognition E21 Accounting for Government Grants and Disclosure of Government

Assistance E22 Accounting for Business Combinations Final Standards Published: IAS 14 (1981), Reporting Financial Information by Segment IAS 15 (1981), Information Reflecting the Effects of Changing Prices

53

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. Exposure Drafts Published: E23 Accounting for the Effects of Changes in Foreign Exchange

Rates E24 Capitalization of Borrowing Costs Final Standards Published: IAS 16 (1982) Accounting for Property, Plant and Equipment IAS 17 (1982) Accounting for Leases IAS 18 (1982) Revenue Recognition

54

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'. Exposure Drafts Published: • E25, Disclosure of Related Party Transactions Final Standards Published: • 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

55

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. Exposure Drafts Published: E26 Accounting for Investments Final Standards Published: IAS 23 (1984) Capitalization of Borrowing Costs IAS 24 (1984) Related Party Disclosures

56

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. Exposure Drafts Published: E27, Accounting and Reporting by Retirement Benefit Plans Final Standards Published: None

57

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 Exposure Drafts Published: E28 Accounting for Investments in Associates and Joint Ventures Final Standards Published: IAS 25 (1986) Accounting for Investments

58

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. Exposure Drafts Published: E29 Disclosures in the Financial Statements of Banks E30 Consolidated Financial Statements and Accounting for

Investments in Subsidiaries E31 Financial Reporting in Hyperinflationary Economies Final Standards Published: IAS 26 (1987), Accounting and Reporting by Retirement Benefit Plans

59

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 Drafts Published: Exposure Draft: Framework for the Preparation and Presentation of

Financial Statements Final Standards Published: None

60

1989Events 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. Exposure Drafts Published: 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 Final Standards Published: 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

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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. Exposure Drafts Published: None Final Standards Published: IAS 30 (1990) Disclosures in the Financial Statements of Banks

and Similar Financial Institutions IAS 31 (1990) Financial Reporting of Interests in Joint Ventures

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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 Exposure Drafts Published: E36 Cash Flow Statements E37 Research and Development Activities E38 Inventories E39 Capitalization of Borrowing Costs E40 Financial Instruments Final Standards Published: None

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1992

Events • IASC constitution revised. • IASC holds Board meetings in Madrid, Amman, and Chicago Exposure Drafts Published: • 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 Final Standards Published: •

Revision:

64

1993Events • 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

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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. Exposure Drafts Published: E48 Financial Instruments E49 Income Taxes Final Standards Published: None

66

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. Exposure Drafts Published: E50 Intangible Assets E51 Reporting Financial Information by Segment Final Standards Published: New:

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

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1996Events 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. Exposure Drafts Published: E52 Earnings Per Share E53 Presentation of Financial Statements E54 Employee Benefits Final Standards Published: Revision:

IAS 12 (revised 1996), Income Taxes

68

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.

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1997(2) Exposure Drafts Published: 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 Final Standards Published: 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

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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.

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1998(2) Exposure Drafts Published: E62 Financial Instruments: Recognition and Measurement E63 Events After the Balance Sheet Date Final Standards Published: 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 Final Interpretations Published: 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

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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.

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1999(2)

Exposure Drafts Published: E64 Investment Property E65 Agriculture Final Standards Published: Revision:

IAS 10 (revised 1999) Events After the Balance Sheet Date Final Interpretations Published: SIC 15 Operating Leases - Incentives SIC 16 Share Capital - Reacquired Own Equity Instruments

(Treasury Shares)

74

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.

75

2000 (2)• Exposure Drafts Published: • E66 Financial Instruments: Recognition and Measurement - Limited Revisions to IAS

39 • E67 Pension Plan Assets • E68 Income Tax Consequences of Dividends • Final Standards Published: • 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

76

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.

77

2001(2) Exposure Drafts Published: Preface to International Financial Reporting Standards Final Standards Published: New:

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

Final Interpretations Published: 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

78

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.

79

2002 (2) Exposure Drafts Published: 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 Final Standards Published: Revisions:

Preface to International Financial Reporting Standards (2002), replaced Preface to Statements of International Accounting Standards (1982).

IAS 19 (Revised 2002) Employee Benefits. Final Interpretations Published: SIC 32 Intangible Assets - Website Costs

80

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.

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2003 (2) Exposure Drafts Published: 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 Final Standards Published: New:

IFRS 1 (2003), First-time Adoption of International Financial Reporting StandardsRevisions:

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

82

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. Exposure Drafts Published: 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

83

2004 (2) Final Standards Published: 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) Final Interpretations Published: 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)

84

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. • Exposure Drafts Published: • 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

85

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.

86

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.

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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.

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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 Board16 February 2006, Paris

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2005 (2) Final Standards Published: 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 Final Interpretations Published: 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

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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 • Exposure Drafts Published: • 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

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2006 (2)• Final Standards Published: • New:

• IFRS 8 Operating Segments Revisions:

• Final Interpretations Published: • 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

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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 • Exposure Drafts Published: • 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 • Final Standards Published: • New:

Revisions:

• IAS 23 Borrowing Costs • Final Interpretations Published: • New:

Revisions:

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Accounting Standards - Due Process • Due process of accounting standard development is as following:• Deciding on a subject for research. The RAccounting 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.

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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.

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NASsNos.

SubjectIASsNos.

Explanations

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 Investments32,39

Note C

16 Foreign Currency Translation 21 Note D

17 Accounting for Intangible Assets 38 ---

18Consolidated 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 ---

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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.

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• 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.

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• 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.

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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.

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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.

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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.

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Auditing Standards - Due Process

104

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)

105

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

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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.

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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

Communications with Management 107

Examination of Prospective Financial Information 340

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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.

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Sources: Accounting in 2015 CPA Journal By Michael Alles, Alexander Kogan, and Miklos A.

Vasarhelyi In Brief