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388 PART 4 Accounting

the Securities Exchange Commission requires that financial statements either be
based on U.S. GAAP or be reconciled to U.S. GAAP. This requirement has been
unacceptable to some business firms. For example, until 1994, there were no
German-based firms listed on any U.S. stock exchange because they had been
unwilling to comply with U.S. accounting standards.
Many U.S. companies are already in compliance with international standards.
For many accounting issues there is no significant difference between U.S. GAAP
and IFRS. Where significant differences exist, the IASB is working with the Financial
Accounting Standards Board and the Government Accounting Standards Board to
reconcile differences and move toward harmonization.
The international standards are gaining increased acceptance, with over 40 coun-
tries permitting or requiring use of IFRS. Additionally, many developing countries
that have insufficient resources to develop domestic standards may choose to adopt
the international standards, and thus facilitate their national economic progress.
Worldwide acceptance of the IFRS will ultimately be determined by the Inter-
national Organization of Securities Commissions (IOSCO) and the individual
securities commissions that make up the IOSCO. Over 60 securities regulatory
agencies worldwide, including the SEC, are members of IOSCO. A major objective
of IOSCO is to facilitate cross-border securities offerings and multiple listings with-
out compromising the financial statement information provided.

International Auditing and Assurance
Standards Board

International Auditing and Assurance International standards on auditing are issued by the International Auditing and
Standards Board (IAASB) The board Assurance Standards Board (IAASB), a committee of the International Federation
that works to improve the uniformity of
auditing practices and related services of Accountants. The IAASB, previously called the International Audit Practices
throughout the world by issuing Committee, works to improve the uniformity of auditing practices and related serv-
pronouncements on a variety of audit ices throughout the world by issuing pronouncements on a variety of audit and
and assurance functions and by assurance functions and by promoting their acceptance worldwide.
promoting their acceptance worldwide
The International Federation of Accountants (IFAC) was established in 1977.
International Federation of Accountants
(IFAC) An organization of national IFAC is an organization of national professional accountancy organizations that
professional accountancy organizations represent accountants employed in public practice, business and industry, the
that represent accountants employed in public sector, and education, as well as some specialized groups that interface fre-
public practice, business and industry,
the public sector, and education, as well quently with the profession. Currently, it has 156 member bodies in 114 countries,
as some specialized groups that representing 2 million accountants. The IFAC’s structure and operations provide for
interface frequently with the profession representation of its diverse member organizations. The IFAC strives to develop the
profession and harmonize its standards worldwide to enable accountants to pro-
vide services of consistently high quality in the public interest.
The IAASB’s mission is to foster internationally recognized standards of audit-
ing. The major objective of these standards is the development of uniform auditing
practices and procedures across countries. However, the implementation of or
adherence to the international standards is left up to standard-setters in individual
countries; the IAASB has no enforcement mechanism of its own.

International Standards on Auditing
International Standards on Auditing International Standards on Auditing (ISAs) contain basic principles and essential
(ISAs) The basic principles and procedures for auditing, along with related guidance in the form of explanatory and
essential procedures for auditing, along other material. The basic principles and essential procedures are to be interpreted
with related guidance in the form of
explanatory and other material in the context of the explanatory and other material that provide guidance in their
application. ISAs cannot override national regulations or pronouncements govern-

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