Handbook of Asset and Liability Management: From models to optimal return strategies

5

IFRS and IAS Accounting

Brebis comptées le loup les mange. (Virgile)

As seen in the previous chapter, the accounting standard directly affects the hedging behaviour of managers: volatility in the incomes may arise from the chosen accounting method and thus may encourage the manager to hedge his positions or to forget them.

In this context, a new international accounting standard arose by the end of the 90s in order to promote a presentation of company income that was uniform worldwide. The International Financial Reporting Standards (IFRS) were introduced to encourage this worldwide harmonization of the accounting rules.

5.1 IFRS, INTERNATIONAL ORGANIZATIONS AND RULE PRESENTATION

5.1.1 International organizations

5.1.1.1 IASB organization

The International Accounting Standards Board (IASB) was founded in April 2001 (on the model of American FASB) as the successor of the International Accounting Standards Committee (IASC) founded initially in 1973. IASC is now a non-profit organization with 19 trustees while IASB consists of 14 members (“The Board”) with 12 full-time members (five members must be former auditors, three former preparers of accounts, three former users of accounts and one an academic).

The IASB has three main objectives:

• setting International Financial Reporting Standards;
• promoting the IFRS and imposing them as a reference;
• contributing to the international harmonization of accounting practices and of presentation of financial statements.

5.1.1.2 Local accounting ...