Financial reporting is essentially a method of communication whereby a reporting entity presents financial information to interested external parties. As with any communication process, there need to be in place mechanisms for ensuring that the information being communicated is understandable and pertinent to the needs of users.
It was not until the mid-twentieth century that significant thought was given to how financial reporting should be regulated. The first part of this chapter considers how the international community began to debate the benefits of international harmonisation of financial reporting standards, and the steps taken to achieve that goal.
When the move towards an international financial reporting framework gathered momentum, a new regulatory framework began to develop, leading to today's environment in which the IFRS Foundation, through the International Accounting Standards Board (IASB), aims to develop a single set of high quality, understandable, enforceable and globally accepted International Financial Reporting Standards. The second part of this chapter summarises the role and status of the IASB and IFRSs, including a discussion of the main features of the standard-setting process.
The final parts of this chapter look at the current state of harmonisation with IFRS around the world, and given that more and more countries are adopting or converging with IFRS (a distinction that will also be explored), there ...