Accounting standards and standard setting - IASCF Monitoring Board reaffirms fundamental principles

The Monitoring Board of the International Accounting Standards Committee Foundation has published a statement reaffirming the fundamental principles on which accounting standards and the standard setting process should be based. The Board notes in its statement:

Accounting standard setters, both nationally and internationally, are currently considering how accounting standards can be improved in light of the recent credit crisis. We strongly support these efforts and agree that the credit crisis offers important lessons for how accounting standards can be improved to offer greater transparency in times of market stress, to the benefit of both investors and market stability.

... The International Accounting Standards Board (IASB) in its Framework and the U.S. Financial Accounting Standards Board (FASB) in its Statements of Financial Accounting Concepts provide objectives of financial reporting and describe the characteristics of accounting standards that support those objectives. These collectively form the foundation on which individual standards are developed. They are universal in that they apply to financial reporting for businesses of all sizes, across all industries. Though each standard setter has presented these objectives and characteristics in its own way, consistent principles can be readily identified. We view the primary objective of financial reporting as being to provide information on an entity’s financial performance in a way that is useful for decision-making for present and potential investors. To be considered decision-useful, information provided through the application of the accounting standards must, at a minimum, be relevant, reliable, understandable and comparable".