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5. The relationship of SNA and IASB

 The issue

The International Accounting Standards Board is an independent, privately-funded accounting standard-setter based in London, UK. The Board members come from nine countries and have a variety of functional backgrounds. The IASB is committed to developing, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require transparent and comparable information in general purpose financial statements.  

In addition, the IASB co-operates with national accounting standard-setters to achieve convergence in accounting standards around the world. Nearly 100 countries currently require or permit the use of, or have a policy of convergence with IFRSs (International financial reporting standards). The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) also issued on 27 February 2006 an agreement in which they ‘each acknowledged their commitment to the development of high quality, compatible accounting standards that could be used for both domestic and cross-border financial reporting. The FASB and the IASB pledged to use their best efforts (a) to make their existing financial reporting standards fully compatible as soon as is practicable and (b) to co-ordinate their future work programmes to ensure that once achieved, compatibility is maintained.

 Reasons for monitoring the works of IASB

For purpose of relevance, the consistency of the SNA with International Accounting Standards set by the International Accounting Standards Board (IASB) should be monitored. A number of issues deliberated by IASB were incorporated in the 1993 SNA update, namely employee stock options and the treatment of BOOT schemes. It is necessary that the ISWGNA continues to follow the deliberations on various issues taken up by the IASB and provides intermittent reports on those issues that may have an impact on SNA methodology.      

Currently there are two topics on the agenda of the IASB that may have an impact on SNA methodology.

IAS 38 Intangible Assets – Advertising and Promotional costs

Summary of the issue: At its September 2006 meeting, the IFRIC agreed to take on a project to consider when costs incurred for advertising and promotional activities (including catalogues) may be carried forward in the balance sheet. In so doing the IFRIC agreed that it would pay particular attention to paragraphs 68-70 of IAS 38, which state that advertising and promotional expenditure must be recognized as an expense when incurred but do not preclude recognizing a prepayment when payment for the goods or services has been made in advance of the delivery of goods or rendering of services.

IAS 41 - Recognition and Measurement of Biological Assets and Agricultural Produce in Accordance with IAS 41 (proposed amendments referred to the Board in January / February 2007)

Summary of the issue: This project was originally discussed between September 2003 and May 2004. The project is considering two questions in respect of IAS 41:  
• how an entity should account for an obligation to replant a biological asset; and  
• what the exclusion from taking into account increases in value from “additional biological transformation” means in the context of paragraph 21 of IAS 41.

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