What were the 'International Accounting Standards - IAS'

International Accounting Standards (IAS) are older accounting standards which were replaced in 2001 by International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), an independent international standard setting body based in London.

BREAKING DOWN 'International Accounting Standards - IAS'

International Accounting Standards (IAS) were the first international accounting standards that were issued by the International Accounting Standards Committee (IASC), formed in 1973. The goal then, as it remains today, was to make it easier to compare businesses around the world, increase transparency and trust in financial reporting and foster global trade and investment.

Benefits of International Accounting Standards

Globally comparable accounting standards promote transparency, accountability and efficiency in financial markets around the world. This enables investors and other market participants to make informed economic decisions about investment opportunities and risks, and improves capital allocation. Universal standards also significantly reduce reporting and regulatory costs, especially for companies with international operations and subsidiaries in multiple countries.

Progress Towards Universal Adoption of IFRS

There has been significant progress towards developing a single set of high-quality global accounting standards since the IASC was replaced by the IASB. IFRS have been adopted by the European Union, leaving the U.S., Japan (where voluntary adoption is allowed) and China (which says it is working towards IFRS) as the only major capital markets without an IFRS mandate. As of 2018, 144 jurisdictions require the use of IFRS standards for all or most publicly listed companies, and a further 12 jurisdictions permit its use.

The U.S. is exploring adopting international accounting standards. Since 2002, America's accounting-standards body, the Financial Accounting Standards Board (FASB) and the IASB have been collaborating on a project to improve and converge U.S. generally accepted accounting principles (GAAP) and IFRS. However, while the FASB and IASB have issued norms together, the convergence process is taking much longer than was expected - in part because of the complexity of implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Securities and Exchange Commission (SEC), which regulates U.S. securities markets, has long supported high-quality global accounting standards in principle, and continues to do so. In the meantime, because U.S. investors and companies routinely invest trillions of dollars abroad, fully understanding the similarities and differences between U.S. GAAP and IFRS, is crucial. To learn about the differences between IFRS and GAAP, read What are some of the key differences between IFRS and U.S. GAAP?

RELATED TERMS
  1. Accounting Standard

    An accounting standard is a common set of principles, standards ...
  2. International Financial Reporting ...

    International Financial Reporting Standards (IFRS) are a set ...
  3. Accounting Changes And Error Correction

    Requirements for the accounting for and reporting of a change ...
  4. Accounting Interpretation

    Accounting interpretation is a statement, issued by accounting ...
  5. Underwriting Standards

    Underwriting standards are guidelines established to ensure that ...
  6. Financial Accounting

    Financial accounting is the process of recording, summarizing ...
Related Articles
  1. Investing

    International Reporting Standards Gain Global Recognition

    Comparing financial numbers from corporations in different countries is possible with the adoption of IFRS.
  2. Investing

    GAAP And The IFRS Standards Convergence Efforts In 3 Substantial Areas

    Understand the specific steps that have been taken in hopes of converging the GAAP and the IFRS accounting standards, despite the philosophically and culturally based methodological differences ...
  3. Investing

    International Financial Reporting Standards

    Learn about the purpose of the IFRS, as well as its benefits, goals, and fundamental difference from the U.S. GAAP.
  4. Investing

    GAAP

    Learn more about the generally accepted accounting principles, standards and procedures that companies use to compile their financial statements.
  5. Trading

    Forex Basics: Setting Up An Account

    The line between profitable forex trading and ending up in the red may be as simple as choosing the right account.
  6. Investing

    What are Financial Statements?

    Financial statements are a picture of a company’s financial health for a given period of time at a given point in time. The statements provide a collection of data about a company’s financial ...
  7. Investing

    Grasp the Accounting of Private Equity Funds

    Read about private equity accounting and how it is different than that of other investment vehicles. The nature of private equity makes a difference.
  8. Personal Finance

    How Fiduciary and Suitability Standards Differ

    There are big differences between how advisors and brokers qualify investments for clients.
  9. Investing

    What is Accounting?

    Accounting is the recording of financial transactions of a business or organization. It also includes the process of summarizing, analyzing and reporting these transactions in financial statements.
RELATED FAQS
  1. How is accounting in the United States different from international accounting?

    Learn how accounting standards differ between the International Financial Reporting Standards, or IFRS, and generally accepted ... Read Answer >>
  2. What does financial accounting focus on?

    Learn the main tenets of financial accounting, the guidelines by which it is governed and how outsiders use it to gauge a ... Read Answer >>
  3. What are the differences between a change in accounting principle and a change in ...

    Learn how to differentiate between a change in accounting principle and a change in accounting estimate and how accountants ... Read Answer >>
  4. What are the objectives of financial accounting?

    Learn about the principle objectives of financial accounting, including the furnishing of the financial statements for those ... Read Answer >>
  5. How does financial accounting help decision making?

    Read a brief overview of some areas where financial accounting helps in decision making for investors, lending institutions ... Read Answer >>
  6. How does financial accounting differ from managerial accounting?

    Learn about the main differences between financial accounting and managerial accounting, including why one is highly uniform ... Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  3. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  4. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
Trading Center