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Sarbanes–Oxley Act

01. [pic]Sarbanes–Oxley Act Sen. Paul Sarbanes (D–MD) and Rep.

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Michael G. Oxley (R–OH-4), the co-sponsors of the Sarbanes–Oxley Act. The Sarbanes–Oxley Act of 2002 (Pub. L. 107-204, 116 Stat. 745, enacted July 30, 2002), also known as the ‘Public Company Accounting Reform and Investor Protection Act’ (in the Senate) and ‘Corporate and Auditing Accountability and Responsibility Act’ (in the House) and commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law enacted on July 30, 2002, which set new or enhanced standards for all U. S. public company boards, management and public accounting firms.

It is named after sponsors U. S. Senator Paul Sarbanes (D-MD) and U. S. Representative Michael G. Oxley (R-OH). The act was approved by the House by a vote of  423 in favor, 3 opposed, and 8 abstaining and by the Senate with a vote of  99 in favor, 1 abstaining. President George W. Bush signed it into law, stating it included “the most far-reaching reforms of American business practices of Franklin D. Roosevelt. ” Outliness Sarbanes–Oxley contains 11 titles that describe specific mandates and requirements for financial reporting. Each title consists of several sections, summarized below. . Public Company Accounting Oversight Board (PCAOB) 2. Auditor Independence 3. Corporate Responsibility 4. Enhanced Financial Disclosures 5. Analyst Conflicts of Interest 6. Commission Resources and Authority 7. Studies and Reports 8. Corporate and Criminal Fraud Accountability 9. White Collar Crime Penalty Enhancement 10. Corporate Tax Returns 11. Corporate Fraud Accountability Criticism Congressman Ron Paul and others such as former Arkansas governor Mike Huckabee have contended that SOX was an unnecessary and costly government intrusion into corporate management that places U. S. orporations at a competitive disadvantage with foreign firms, driving businesses out of the United States. In an April 14, 2005 speech before the U. S. House of Representatives, Paul stated, “These regulations are damaging American capital markets by providing an incentive for small US firms and foreign firms to deregister from US stock exchanges. According to a study by a researcher at the Wharton Business School, the number of American companies deregistering from public stock exchanges nearly tripled during the year after Sarbanes–Oxley became law, while the New York Stock Exchange had only 10 new foreign listings in all of 2004.

The reluctance of small businesses and foreign firms to register on American stock exchange is easily understood when one considers the costs Sarbanes–Oxley imposes on businesses. According to a survey by Korn/Ferry International, Sarbanes–Oxley cost Fortune 500 companies an average of $5. 1 million in compliance expenses in 2004, while a study by the law firm of Foley and Lardner found the Act increased costs associated with being a publicly held company by 130 percent. ” During the financial crisis of 2007-2010, critics blamed Sarbanes–Oxley for the low number of Initial Public Offerings (IPOs) on American stock exchanges during 2008.

In November 2008, Newt Gingrich and co-author David W. Kralik called on Congress to repeal Sarbanes–Oxley. Praise Former Federal Reserve Chairman Alan Greenspan praised the Sarbanes–Oxley Act: “I am surprised that the Sarbanes–Oxley Act, so rapidly developed and enacted, has functioned as well as it has… the act importantly reinforced the principle that shareholders own our corporations and that corporate managers should be working on behalf of shareholders to allocate business resources to their optimum use.

SOX has been praised by a cross-section of financial industry experts, citing improved investor confidence and more accurate, reliable financial statements. The CEO and CFO are now required to unequivocally take ownership for their financial statements under Section 302, which was not the case prior to SOX. Further, auditor conflicts of interest have been addressed, by prohibiting auditors from also having lucrative consulting agreements with the firms they audit under Section 201. SEC Chairman Christopher Cox stated in 2007: “Sarbanes–Oxley helped restore trust in U.

S. markets by increasing accountability, speeding up reporting, and making audits more independent. One fraud uncovered by the Securities and Exchange Commission (SEC) in November 2009 may be directly credited to Sarbanes-Oxley. The fraud which spanned nearly 20 years and involved over $24 million was committed by Value Line (NASDAQ: VALU) against its mutual fund shareholders. The fraud was first reported to the SEC in 2004 by the Value Line Fund (NASDAQ: VLIFX) portfolio manager who was asked to sign a Code of Business Ethics as part of SOX.

Restitution totaling $34 million will be placed in a fair fund and returned to the affected Value Line mutual fund investors. No criminal charges have been filed. Legal challenges A lawsuit (Free Enterprise Fund v. Public Company Accounting Oversight Board) was filed in 2006 challenging the constitutionality (legality) of the PCAOB. The complaint argues that because the PCAOB has regulatory powers over the accounting industry, its officers should be appointed by the President, rather than the SEC. Further, because the law lacks a “severability clause,” if part of the law is judged unconstitutional, so is the remainder.

If the plaintiff prevails, the U. S. Congress may have to devise a different method of officer appointment. 02. [pic]Generally Accepted Accounting Principles Generally Accepted Accounting Principles (GAAP) is a term used to refer to the standard framework of guidelines for financial accounting used in any given jurisdiction which are generally known as Accounting Standards. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.

Principles derive from tradition, such as the concept of matching. In any report of financial statements (audit, compilation, review, etc. ), the preparer/auditor must indicate to the reader whether or not the information contained within the statements complies with GAAP. • Principle of regularity: Regularity can be defined as conformity to enforced rules and laws. • Principle of consistency: This principle states that when a business has once fixed a method for the accounting treatment of an item, it will enter all similar items that follow in exactly the same way. Principle of sincerity: According to this principle, the accounting unit should reflect in good faith the reality of the company’s financial status. • Principle of the permanence of methods: This principle aims at allowing the coherence and comparison of the financial information published by the company. • Principle of non-compensation: One should show the full details of the financial information and not seek to compensate a debt with an asset, revenue with an expense, etc. see convention of conservatism) • Principle of prudence: This principle aims at showing the reality “as is”: one should not try to make things look prettier than they are. Typically, revenue should be recorded only when it is certain and a provision should be entered for an expense which is probable. • Principle of continuity: When stating financial information, one should assume that the business will not be interrupted. This principle mitigates the principle of prudence: assets do not have to be accounted at their disposable value, but it is accepted that they are at their historical value (see depreciation and going concern). Principle of periodicity: Each accounting entry should be allocated to a given period, and split accordingly if it covers several periods. If a client pre-pays a subscription (or lease, etc. ), the given revenue should be split to the entire time-span and not counted for entirely on the date of the transaction. • Principle of Full Disclosure/Materiality: All information and values pertaining to the financial position of a business must be disclosed in the records. Principle of Utmost Good Faith: All the information regarding to the firm should be disclosed to the insurer before the insurance policy is taken. 03. The International Financial Reporting Standards (IFRS) Many countries use or are converging on the International Financial Reporting Standards (IFRS), established and maintained by the International Accounting Standards Board. In some countries, local accounting principles are applied for regular companies but listed or large companies must conforms to IFRS, so statutory reporting is comparable internationally, across jurisdictions.

International Financial Reporting Standards (IFRS) are principles-based Standards, Interpretations and the Framework (1989) adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS was issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On 1 April 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and SICs.

The IASB has continued to develop standards calling the new standards IFRS International Financial Reporting Standards comprise: • International Financial Reporting Standards (IFRS)—standards issued after 2001 • International Accounting Standards (IAS)—standards issued before 2001 • Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC)—issued after 2001 • Standing Interpretations Committee (SIC)—issued before 2001 • Framework for the Preparation and Presentation of Financial Statements (1989)

Requirements of IFRS IFRS financial statements consist of (IAS1. 8) • a Statement of Financial Position • a Statement of Comprehensive Income or two separate statements comprising an Income Statement and separately a Statement of Comprehensive Income, which reconciles Profit or Loss on the Income statement to total comprehensive income • a Statement of Changes in Equity (SOCE) • a Cash Flow Statement or Statement of Cash Flows List of IFRS statements with full text link

The following IFRS statements are currently issued: • 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 Resources • IFRS 7 Financial Instruments: Disclosures • IFRS 8 Operating Segments • IFRS 9 Financial Instruments • 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 (superseded by IFRS 8 on 1 January 2008) • 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 • 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 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 (Financial instruments disclosures are in IFRS 7 Financial Instruments: Disclosures, and no longer in IAS 32) • 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 List of Interpretations with full text link • Preface to International Financial Reporting Interpretations (Updated to January 2006 • IFRIC 1 Changes in Existing Decommissioning,

Restoration and Similar Liabilities (Updated to January 2006) • IFRIC 7 Approach under IAS 29 Financial Reporting in Hyperinflationary Economies (Issued February 2006) • IFRIC 8 Scope of IFRS 2 (Issued February 2006)—has been eliminated with Amendments issued to IFRS 2 • IFRIC 9 Reassessment of Embedded Derivatives (Issued April 2006) • IFRIC 10 Interim Financial Reporting and Impairment (Issued November 2006) • IFRIC 11 IFRS 2-Group and Treasury Share Transactions (Issued November 2006)—has been eliminated with Amendments issued to IFRS 2 • IFRIC 12 Service Concession Arrangements (Issued November 2006) • IFRIC 13 Customer Loyalty Programmes (Issued in June 2007) • IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (issued in July 2007) • IFRIC 15 Agreements for the Construction of Real Estate (issued in July 2008) • IFRIC 16 Hedges of a Net Investment in a Foreign Operation (issued in July 2008) • IFRIC 17 Distributions of Non-cash Assets (issued in November 2008) • IFRIC 18 Transfers of Assets from Customers (issued in January 2009) • SIC 7 Introduction of the Euro (Updated to January 2006) • SIC 10 Government Assistance-No Specific Relation to Operating Activities (Updated to January 2006) • SIC 12 Consolidation-Special Purpose Entities (Updated to January 2006) • SIC 13 Jointly Controlled Entities-Non-Monetary Contributions by Venturers (Updated to January 2006) • SIC 15 Operating Leases-Incentives (Updated to January 2006) • SIC 21 Income Taxes-Recovery of Revalued Non-Depreciable Assets (Updated to January 2006) • SIC 25 Income Taxes-Changes in the Tax Status of an Entity or its Shareholders (Updated to January 2006) • SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease (Updated to January 2006) • SIC 29 Disclosure-Service Concession Arrangements (Updated to January 2006) • SIC 31 Revenue-Barter Transactions Involving Advertising Services (Updated to January 2006) • SIC 32 Intangible Assets-Web Site Costs (Updated to January 2006) • SIC 33 Consolidation and equity method – Potential voting rights and allocation of ownership interests 04. The International Accounting Standards Board (IASB)

The International Accounting Standards Board (IASB) is an independent, privately-funded accounting standard-setter based in London, England. The IASB was founded on April 1, 2001 as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (the new name for International Accounting Standards issued after 2001), and promoting the use and application of these standards. Foundation of the IASB In April 2001, the International Accounting Standards Committee Foundation (IASCF), since renamed as the IFRS Foundation, was formed as a not-for-profit corporation incorporated in the US state of Delaware.

The IFRS Foundation is the parent entity of the International Accounting Standards Board (IASB), an independent accounting standard-setter based in London, England. On 1 March 2001, the IASB assumed accounting standard-setting responsibilities from its predecessor body, the International Accounting Standards Committee (IASC). This was the culmination of a restructuring based on the recommendations of the report Recommendations on Shaping IASC for the Future. The IASB structure has the following main features: the IFRS Foundation is an independent organization having two main bodies, the Trustees and the IASB, as well as a IFRS Advisory Council and the IFRS Interpretations Committee (formerly the IFRIC).

The IASC Foundation Trustees appoint the IASB members, exercise oversight and raise the funds needed, but the IASB has responsibility for setting International Financial Reporting Standards (international accounting standards). IASB Members The IASB has 15 Board members, each with one vote. They are selected as a group of experts with a mix of experience of standard-setting, preparing and using accounts, and academic work. [2] At their January 2009 meeting the Trustees of the Foundation concluded the first part of the second Constitution Review, announcing the creation of a Monitoring Board and the expansion of the IASB to 16 members and giving more consideration to the geographical composition of the IASB. The IFRS Interpretations OF Committee has 14 members.

Its brief is to provide timely guidance on issues that arise in practice. A unanimous vote is not necessary in order for the publication of a Standard, exposure draft, or final “IFRIC” Interpretation. The Board’s 2008 Due Process manual stated that approval by nine of the members is required. Funding The IFRS Foundation raises funds for the operation of the IASB. [7] Most contributors are banks and other companies which use or have an interest in promoting international standards. In 2008, American companies gave ? 2. 4m, more than those of any other country. However, contributions fell in the wake of the financial crisis of 2007–2010, and a shortfall was reported in 2010. 05. The Basel Committee

The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. In this regard, the Committee is best known for its international standards on capital adequacy; the Core Principles for Effective Banking Supervision; and the Concordat on cross-border banking supervision.

The Committee’s members come from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The present Chairman of the Committee is Mr Nout Wellink, President of the Netherlands Bank. The Committee encourages contacts and cooperation among its members and other banking supervisory authorities. It circulates to supervisors throughout the world both published and unpublished papers providing guidance on banking supervisory matters. Contacts have been further strengthened by an International Conference of Banking Supervisors (ICBS) which takes place every two years.

The Committee’s Secretariat is located at the Bank for International Settlements in Basel, Switzerland, and is staffed mainly by professional supervisors on temporary secondment from member institutions. In addition to undertaking the secretarial work for the Committee and its many expert sub-committees, it stands ready to give advice to supervisory authorities in all countries. Mr Stefan Walter is the Secretary General of the Basel Committee. Main Expert Sub-Committees The Committee’s work is organised under four main sub-committees: • The Standards Implementation Group • The Policy Development Group • The Accounting Task Force • The Basel Consultative Group Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.

The purpose of Basel II, which was initially published in June 2004, is to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face. Advocates of Basel II believe that such an international standard can help protect the international financial system from the types of problems that might arise should a major bank or a series of banks collapse. In theory, Basel II attempted to accomplish this by setting up risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices.

Generally speaking, these rules mean that the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability. Objective The final version aims at: 1. Ensuring that capital allocation is more risk sensitive; 2. Separating operational risk from credit risk, and quantifying both; 3. Attempting to align economic and regulatory capital more closely to reduce the scope for regulatory arbitrage. The Accord in operation Basel II uses a “three pillars” concept – (1) minimum capital requirements (addressing risk), (2) supervisory review and (3) market discipline. The Basel I accord dealt with only parts of each of these pillars.

For example: with respect to the first Basel II pillar, only one risk, credit risk, was dealt with in a simple manner while market risk was an afterthought; operational risk was not dealt with at all. The first pillar The first pillar deals with maintenance of regulatory capital calculated for three major components of risk that a bank faces: credit risk, operational risk, and market risk. Other risks are not considered fully quantifiable at this stage. The credit risk component can be calculated in three different ways of varying degree of sophistication, namely standardized approach, Foundation IRB and Advanced IRB. IRB stands for “Internal Rating-Based Approach”.

For operational risk, there are three different approaches – basic indicator approach or BIA, standardized approach or TSA, and the internal measurement approach (an advanced form of which is the advanced measurement approach or AMA). For market risk the preferred approach is VaR (value at risk). As the Basel 2 recommendations are phased in by the banking industry it will move from standardised requirements to more refined and specific requirements that have been developed for each risk category by each individual bank. The upside for banks that do develop their own bespoke risk measurement systems is that they will be rewarded with potentially lower risk capital requirements.

In future there will be closer links between the concepts of economic profit and regulatory capital. Credit Risk can be calculated by using one of three approaches: 1. Standardised Approach 2. Foundation IRB (Internal Ratings Based) Approach 3. Advanced IRB Approach The standardised approach sets out specific risk weights for certain types of credit risk. The standard risk weight categories are used under Basel 1 and are 0% for short term government bonds, 20% for exposures to OECD Banks, 50% for residential mortgages and 100% weighting on unsecured commercial loans. A new 150% rating comes in for borrowers with poor credit ratings. The minimum capital requirement (the percentage of risk weighted assets to be held as capital) remains at 8%.

For those Banks that decide to adopt the standardised ratings approach they will be forced to rely on the ratings generated by external agencies. Certain Banks are developing the IRB approach as a result. The second pillar The second pillar deals with the regulatory response to the first pillar, giving regulators much improved ‘tools’ over those available to them under Basel I. It also provides a framework for dealing with all the other risks a bank may face, such as systemic risk, pension risk, concentration risk, strategic risk, reputational risk, liquidity risk and legal risk, which the accord combines under the title of residual risk. It gives banks a power to review their risk management system. The third pillar

This pillar aims to promote greater stability in the financial system Market discipline supplements regulation as sharing of information facilitates assessment of the bank by others including investors, analysts, customers, other banks and rating agencies. It leads to good corporate governance. The aim of pillar 3 is to allow market discipline to operate by requiring lenders to publicly provide details of their risk management activities, risk rating processes and risk distributions. It sets out the public disclosures that banks must make that lend greater insight into the adequacy of their capitalization. When marketplace participants have a sufficient nderstanding of a bank’s activities and the controls it has in place to manage its exposures, they are better able to distinguish between banking organizations so that they can reward those that manage their risks prudently and penalize those that do not. 06. The Financial Accounting Standards Board (FASB) The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States in the public’s interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U. S.

It was created in 1973, replacing the Committee on Accounting Procedure (CAP) and the Accounting Principles Board (APB) of the American Institute of Certified Public Accountants (AICPA). Mission statement The FASB’s mission is “to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information. ” To achieve this, FASB has five goals: • Improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability, and on the qualities of comparability and consistency. • Keep standards current to reflect changes in methods of doing business and in the economy. Consider promptly any significant areas of deficiency in financial reporting that might be improved through standard setting. • Promote international convergence of accounting standards concurrent with improving the quality of financial reporting. • Improve common understanding of the nature and purposes of information in financial reports. FASB pronouncements In order to establish accounting principles, the FASB issues pronouncements publicly, each addressing general or specific accounting issues. These pronouncements are: • Statements of Financial Accounting Standards • Statements of Financial Accounting Concepts • FASB Interpretations FASB Technical Bulletins • EITF Abstracts FASB 11 Concepts 1. Money measurement 2. Entity 3. Going concern 4. Cost 5. Dual aspect 6. Accounting period 7. Conservation 8. Realization 9. Matching 10. Consistency 11. Materiality 07. Committee on Accounting Procedure (CAP) In 1939, encouraged by the SEC, the American Institute of Certified Public Accountants (AICPA) formed the Committee on Accounting Procedure (CAP). From 1939 to 1959, CAP issued 51 Accounting Research Bulletins that dealt with issues as they arose.

CAP had only limited success because it did not develop an overall accounting framework, but rather, acted upon specific problems as they arose. Accounting Principles Board (APB) In 1959, the AICPA replaced CAP with the Accounting Principles Board (APB), which issued 31 opinions and 4 statements until it was dissolved in 1973. GAAP essentially arose from the opinions of the APB. The APB was criticized for its structure and for several of its positions on controversial topics. In 1971 the Wheat Committee (chaired by Francis Wheat) was formed to evaluate the APB and propose changes. Financial Accounting Standards Board (FASB) The Wheat Committee recommended the replacement of the Accounting Principles Board with a new standards-setting structure.

This new structure was implemented in 1973 and was made up of three organizations: Financial Accounting Foundation (FAF) Financial Accounting Standards Board (FASB) Financial Accounting Standards Advisory Council (FASAC). Of these organizations, FASB (pronounced “FAS-B”) is the primary operating organization. Unlike the APB, FASB was designed to be an independent board comprised of members who have severed their ties with their employers and private firms. FASB issues statements of financial accounting standards, which define GAAP. The AICPA issues audit guides. When a conflict occurs, FASB rules. International Accounting Standards Committee (IASC)

The International Accounting Standards Committee (IASC) was formed in 1973 to encourage international cooperation in developing consistent worldwide accounting principles. In 2001, the IASC was succeeded by the International Accounting Standards Board (IASB), an independent private sector body that is structured similar to FASB. Governmental Accounting Standards Board (GASB) The financial reports of state and local goverment entities are not directly comparable to those of businesses. In 1984, the Governmental Accounting Standards Board (GASB) was formed to set standards for the financial reports of state and local government. GASB was modeled after FASB.