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The International Financial Reporting Standards (IFRS) Foundation is a nonprofit organization dedicated to the standardization of accounting procedures among businesses and government agencies around the world. They seek to create a common framework to facilitate financial communication between businesses, agencies and organizations that operate under different national laws. They also establish commercial accounting practices, reporting procedures and financial language standards for use by the global financial community. The IFRS was previously known as the IASC Foundation until 2010, at which point the name was officially changed to its current title.
Structure of the IASB and IFRS
The IFRS Foundation oversees the operations of the IASB, which is an independent organization that represents private-sector interests through the standardization of accounting practices. In effect, it serves as the legal entity for the International Accounting Standards Board (IASB) to operate under. The organization maintains a comprehensive constitution that is reviewed on a regular basis and amended as needed. A recent amendment also formed an official monitoring board that created a foundation for formal interaction between financial market authorities and the IFRS.
Governance of the IFRS
The foundation is governed by a group of 22 trustees who assume a wide range of responsibilities. Amendments to the IFRS constitutions can only be adopted through a vote of all trustees with a three-fourths majority voting in favor of the change. Among other duties, the trustees are tasked with developing operational procedures for the organization, reaching out to organizations around the globe and connecting with public interests. They also oversee and manage the internal operations of the foundation, including appointing committee members and making strategic decisions on a wide range of issues. The IFRS maintains a list of all current trustees on their official website along with basic biographical information about each.
Global Influence and Organizations
The foundation has ties with different regulatory agencies and boards present in numerous countries, including the International Federation of Accountants (IFAC) and International Accounting Education Standards Board (IAESB). The foundation’s monitoring board includes leaders from some of the most established financial authorities in the world, like the European Commission, Japanese Financial Services Agency and US Security and Exchange Commission.
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The IFRS currently has a presence in over 100 nations, including many that require commercial entities to follow their standards. Trustee positions of the foundation are held by individuals of various nationality and industry to create a network with global reach. These rotating positions allow leaders from different jurisdictions to have input on policy and procedures established by the foundation. They also help the organization build influence with local authorities and companies, encouraging them to adopt standardized practices.
Not all countries force their commercial and non-profit entities to conduct financial operations and keep records according to IFRS standards, but the foundation’s efforts have already brought many nations into the fold. Creating a common financial language for international businesses is becoming increasingly important as companies expand overseas and interact with foreign subsidiaries of other entities. The IFRS Foundation also serves as a source of information regarding all areas of finance for interested parties, including financial crisis prediction and analysis.