The International Accounting Standards Board - Essay Example

The International Accounting Standards Board or IASB is a 16-member board tasked to establish the International Financial Reporting Standards (IFRS). Most of its members come from the United States and Europe. However, over the last five years, there have been more members (3 out of 5) appointed from Asia and South America than from the US or Europe. These appointees are specifically from China, Japan and Brazil. Such a trend raises the question of the effect in the standard-setting policies and procedures of IASB. Will such appointments, in the current or future times, bring about changes in the behaviour of IASB?

BusinessDictionary.com defines behaviour as the “response of an individual or group to an action, environment, person, or stimulus”. In IASB’s case, it seems that the appointment of members who are not either Americans or Europeans by birth is a sign that the IASB may be changing its behaviour in the sense that it is becoming more global in its perspective.

Several events in the past have shown that IASB is indeed changing its behaviour. One is the appointment of members who are from Asia and South America. Another one is the adoption of IASB in 2005 of several criteria for choosing its members. Two of these criteria are the ability to consider “varied viewpoints” and “awareness of the financial reporting environment” (Deloitte, 2009). These two criteria put into words IASB’s consideration of the fact that IFRS are becoming more and more global, as more and more countries are adopting these standards. Thus, it can no longer limit itself to considering the impact of IFRS in Europe or North America alone.

The appointment of these three members will most certainly lead to changes in IASB’s behaviour because these members can give IASB a more expanded view of the impact of IFRS. These members from China, Japan and Brazil, with their various experiences, cultures and thoughts, can contribute new views, new backgrounds and new perspectives on the impact of IFRS in other countries outside of Europe and North America. Their cultural differences and knowledge of the financial reporting environment in their respective countries and regions may also result in an IASB that is more responsive to inputs coming from Asian or South American countries and an IASB that is more considerate of these differences. Read More