Achieving IASB Independence: Creating an independent International Accounting Standards Board (IASB) through the examination and comparison of the organizational structures of the IFRS Foundation, the Financial Accounting Foundation (FAF), and the German Accounting Standards Committee (GASC)

Open Access
Author:
Addis, Michael Richard
Area of Honors:
Accounting
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Karl A Muller Iii, Thesis Supervisor
  • Orie Edwin Barron, Honors Advisor
Keywords:
  • Accounting
  • IASB
  • IFRS
  • FASB
  • GASC
  • FAF
  • Independence
  • Germany
Abstract:
The International Accounting Standards Board (IASB) has been largely criticized for its lack of independence from governmental and political influences. This paper aims to create an organizational structure for the IFRS Foundation, the non-profit corporation that oversees the IASB, that will enhance the independence of this international accounting regulator and enable it to meet the needs of financial statement users around the world by issuing neutral and high quality accounting standards. In this paper, the organizational structure and independence of the IFRS Foundation is compared to its American and German counterparts, the Financial Accounting Foundation (FAF) and the German Accounting Standards Committee (GASC), in order to identify the current independence issues facing each of these organizations and use their best practices to establish an independent structure for the IFRS Foundation. This study finds that the main independence concerns facing the IFRS Foundation, the FAF, and the GASC are governmental influences from the European Union (EU), the U.S., and Germany, respectively. Furthermore, it also finds that the best way to enhance the independence of the IFRS Foundation is to remove the direct influence of national governments from the decision-making and member appointment processes and to allocate positions on advisory and decision-making boards of this organization to members based on their technical expertise and industry, rather than geographic distribution.