Organizing Transnational Standard Setting in Financial Reporting
Chapter 5: Organizational Characteristics of the International Accounting Standards Board
Developing and disseminating accounting standards form the core of the IASB’s responsibilities. Use of IAS/IFRS must nevertheless be permitted by legislators, and private actors, such as stock exchanges or banks, have to recognize them for the standards to be effective. This situation affects the organizational structure of the IASB, which seeks to strike a balance between outside recognition and independent standard setting: On one hand, the organization relies on the support of political and administrative authorities as well as private actors and their willingness to cooperate. On the other hand, the IASB aims at conducting its standardization activities independently and, in the process, establishing itself as an autonomous standard setter not subject to any form of direct control. The organization and procedures of standard setting are thus designed to promote the IASB’s credibility and functionality. In this chapter, changes in IASB’s organizational structure, funding, and the consultation procedures for standard setting will be described and analyzed. It will be shown how the IASB has developed to become a solution-oriented technical standard setter serving the needs of international capital markets and cooperating with practitioners in developing accounting standards for this purpose. Nonetheless, the organization analysis also demonstrates that the IASB’s development has been subject to political influence from the very beginning and that its organizational structures and procedures cannot be accounted for in functional terms only. Recognition of the IASB as a legitimate standard setter has played an important role in organizational matters all along (see Tamm Hallström, 2004). The...
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