International Financial Reporting Standards Advisory Council (IFRS-AC)

What is the IFRS-AC?

The International Financial Reporting Standards Advisory Council (IFRS-AC) is an essential advisory body composed of various financial experts. It plays a crucial role in guiding the International Accounting Standards Board (IASB) concerning the establishment of international accounting standards. This council provides insights into the implications of proposed standards affecting both users and preparers of financial statements. Furthermore, it may offer additional advice to the IASB or trustees of the International Financial Reporting Standards Foundation (IFRS Foundation). The IASB must consult the IFRS-AC before making decisions on significant projects, and the IFRS Foundation trustees must consult with the IFRS-AC before any constitutional changes.

Membership

The IFRS-AC consists of approximately 50 members who typically convene at least three times annually. These members include:

Chief financial and accounting officers from international organizations.
Leading financial analysts.
Academics with significant expertise.
Regulators and accounting standard setters.
Partners from top accounting firms.

Notably, these members serve on an unpaid basis, contributing their time and expertise to enhance global financial reporting.

Quick Facts

Advisory Role: Advises IASB on priorities in setting accounting standards.
Consultation Requirement: IASB and IFRS Foundation trustees must consult the IFRS-AC on major projects or constitutional changes.
Broad Expertise: Members include high-level finance professionals, analysts, academics, regulators, and partners from accounting firms.
Unpaid Service: Members volunteer their service.

Examples

Example 1: Advising on Revenue Recognition Standards

The IFRS-AC provided crucial advice when the IASB was developing the new revenue recognition standard. By considering the potential impact on businesses, financial analysts, and regulatory bodies, the council ensured the standard was robust and practical.

Example 2: Input on Lease Accounting

During the revision of lease accounting standards, the IFRS-AC highlighted the potential implications for financial statement users and preparers, influencing how these changes were implemented to maintain clarity and fairness in financial reporting.

Frequently Asked Questions

What is the primary function of the IFRS-AC?

The IFRS-AC primarily advises the IASB on setting international accounting standards, ensuring they are effective and sustainable from various perspectives, including those of financial statement users and preparers.

Who can become a member of the IFRS-AC?

The IFRS-AC comprises individuals with significant expertise and influence in the financial industry, including CFOs, financial analysts, academics, regulators, and accounting firm partners.

How often does the IFRS-AC meet?

The council typically meets at least three times a year to discuss and provide guidance on relevant matters.

Why are IFRS-AC members unpaid?

The voluntary nature of the IFRS-AC underscores its advisory role’s objective and impartial ethos, ensuring insights are provided without any financial bias.

How does the IFRS-AC influence the IASB’s decisions?

The IASB is required to consult the IFRS-AC ahead of decisions on major projects, incorporating the council’s expert advice into the development of accounting standards.

How does one access further information about the IFRS-AC?

Additional information is available on the IASB’s official website http://www.iasb.org/About+Us/About+the+SAC/About+the+SAC.htm.

International Accounting Standards Board (IASB)

The IASB is the body responsible for developing and issuing International Financial Reporting Standards (IFRS). It operates under the oversight of the IFRS Foundation.

International Financial Reporting Standards Foundation (IFRS Foundation)

The IFRS Foundation oversees the work of the IASB, ensuring it operates efficiently and ethically, and manages development and adoption of IFRS across various countries.

Online Resources

Suggested Books for Further Study

“Wiley IFRS 2023: Interpretation and Application of IFRS Standards” by PKF International Ltd.
- Comprehensive guide on the interpretation and practical use of IFRS standards.
“IFRS: A Guide to International Financial Reporting Standards” by David Alexander and Anne Britton.
- Offers a detailed understanding of IFRS principles and the procedures involved in applying them.
“Applying IFRS Standards” by Ruth Picker, Kerry Clark, John Dunn, David Kolitz, Gilad Livne, Janice Lourens.
- A detailed, practical guide focusing on implementing IFRS in various scenarios.

Accounting Basics: “International Financial Reporting Standards Advisory Council (IFRS-AC)” Fundamentals Quiz

### What is the primary role of the IFRS-AC? - [ ] To issue financial statements - [x] To advise the IASB on setting accounting standards - [ ] To audit companies - [ ] To regulate financial markets > **Explanation:** The IFRS-AC advises the IASB on priorities for setting accounting standards and provides insights into the implications for users and preparers of financial statements. ### Who must the IASB consult before making major project decisions? - [ ] Financial Conduct Authority (FCA) - [x] IFRS-AC - [ ] Securities and Exchange Commission (SEC) - [ ] International Monetary Fund (IMF) > **Explanation:** The IASB is required to consult the IFRS-AC in advance of decisions on major projects. ### How often does the IFRS-AC typically meet? - [ ] Once a year - [ ] Twice a year - [ ] Monthly - [x] At least three times a year > **Explanation:** The IFRS-AC convenes at least three times annually to provide ongoing advice and review. ### Are IFRS-AC members compensated for their service? - [ ] Yes, they receive a salary - [ ] Yes, they receive a stipend - [x] No, they are unpaid - [ ] Only in specific circumstances > **Explanation:** IFRS-AC members serve on a voluntary, unpaid basis, bringing objective advice to the council. ### The IFRS-AC's advice is directed towards which organization? - [ ] Financial Reporting Council (FRC) - [x] International Accounting Standards Board (IASB) - [ ] European Central Bank (ECB) - [ ] World Bank (WB) > **Explanation:** The IFRS-AC provides advice to the International Accounting Standards Board (IASB). ### What is one of the key functions of the IFRS-AC members? - [ ] To prepare tax regulations - [x] To inform IASB about the implications of proposed standards - [ ] To conduct financial audits - [ ] To set interest rates > **Explanation:** Members inform the IASB on the implications of proposed standards for users and preparers of financial statements. ### What constitutes the membership of the IFRS-AC? - [ ] Mainly small business owners - [ ] Government officials only - [x] CFOs, financial analysts, academics, regulators, and partners from leading accounting firms - [ ] Lawyers > **Explanation:** The council's members include chief financial and accounting officers, leading financial analysts, regulators, academics, and partners from leading accounting firms. ### What must the trustees of the IFRS Foundation do before making any constitutional changes? - [ ] Obtain government approval - [ ] Conduct a public referendum - [x] Consult the IFRS-AC - [ ] Seek media opinions > **Explanation:** Trustees of the IFRS Foundation must consult the IFRS-AC before making any changes to its constitution. ### Which body is ultimately responsible for the development and issuance of IFRS? - [ ] Financial Industry Regulatory Authority (FINRA) - [ ] International Financial Reporting Standards Advisory Council (IFRS-AC) - [x] International Accounting Standards Board (IASB) - [ ] Financial Conduct Authority (FCA) > **Explanation:** The International Accounting Standards Board (IASB) is responsible for developing and issuing IFRS. ### Why is the input from IFRS-AC considered valuable? - [ ] It is funded by the government. - [x] It provides diverse and expert perspectives on accounting standards. - [ ] It guarantees financial profits. - [ ] It focuses on local accounting practices only. > **Explanation:** The diverse expertise of IFRS-AC members brings valuable perspectives to the IASB, influencing the effective development of global accounting standards.

Thank you for exploring the comprehensive details of the IFRS-AC. By understanding its purpose and processes, you are better equipped to grasp the intricate dynamics of global financial reporting standards.