The IASC was established in the year 1973, at London, as an independent private-sector body. It sought to lay down comparable and harmonising standards for accounting, in the context of International Financial Transactions. These set standards were commonly termed under International Accounting Standards (IAS).
The membership of the IASC involves about one hundred and forty three organisation in one hundred and four member countries. The main body that undertakes the formulation of a set standard for financial accounting, amongst the member nations, is the IASC Board, comprising sixteen member countries.
In the year 2000, on May 20th, the member countries felt the need to renew the IASC structure and unanimously voted in support of the same. This new structure came into force on April 1st, 2001 and was termed the International Accounting Standards Board (IASB). The new structure comprises two distinct bodies within the IASB, namely, the Trustees and the Board. The trustees perform advisory functions and also raise funds. The Board on the other hand, performs the sole function of setting accounting standards.
On the lines of the IAS as enforced by the IASC, the IASB has come up with the International Financial Reporting Standards (IFRS), as the standards for accounting and financial reporting. Thus, the IFRS is the new standard for accounting and financial reporting, being adopted by the members of the European Union (EU) and other countries like Australia, China, etc.
Reasons for its adoption in Australia
Global markets have become integrated and extremely inter-dependent due to the increase in multilateral business ventures and investments. Thus, acknowledged and approved standards of accounting facilitate easy trading and also increase the trust factors amidst countries. Australia, too, is no exception to this growing globalisation and growth, since it cannot remain aloof from world activities. Therefore, it needs to adopt the same standards of accounting and financial reporting, as wet by major countries and international organisations. Here are some of the important reasons as to why Australia has adopted the International Financial Reporting Standards:
Increased Transparency: IFRS facilitates increased transparency and clarity in global financial undertakings and accounting. Investors can carry forward and implement their investment plans in Australia, without fear of any risks. This would increase Australia's revenue, while also strengthening its multilateral relations.
Greater Comparability: Since the IFRS are the global standards set by IASB, there is bound to be greater comparability between the financial reports of Australia, with other