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Barbara Ruane on IASB and what it means

Barb Ruane '07 was the first Augustana student to be awarded an internship with the Financial Accounting Foundation. After a year with the Governmental Accounting Standards Board (GASB), she went to London and completed a two-year internship with the International Accounting Standards Board (IASB).

Ruane recently came to campus to speak to the juniors and seniors about her three-year journey. She discussed the convergence of international and U.S. GAAP (generally accepted accounting principles), summing it up as "it is happening, every day, with every new announcement."

Ruane moved to Washington, D.C., to start her career as a financial analyst at the
Center for Financial Research & Analysis, a global forensic accounting research organization founded by the author of
Financial Shenanigans.

What is the IASB? Who are the IASB? Why should you care?

By Barbara Ruane

May 20, 2007, seems both like it was yesterday and also ages ago. Since graduation I have been on an accounting whirlwind — one year in Connecticut with the Governmental Accounting Standards Board (GASB) and two years in London with the International Accounting Standards Board (IASB). I had an amazing opportunity to learn from some of the most brilliant accounting minds in the world.

The biggest lesson I learned from my work with the IASB is that accounting is changing. The notion that accounting is static and rigid is gone. Instead, accounting is very, very fluid, something I have been lucky enough to witness and facilitate.

Ten years ago the IASB wasn't on the minds of many accountants. Five years ago? Maybe. Three years ago I researched a term paper for Advanced Accounting II on the IASB, never dreaming that I would actually work there. Now, there are plenty of people paying attention.

In fact, more than 100 countries in the world have adopted International Financial Reporting Standards (IFRSs) as issued by the IASB. More than 100 countries have recognized the IASB as the world's standards setter and see the benefits of conforming to a single set of high quality international standards.

While the U.S. is not currently one of those countries, the Financial Accounting Standards Board (FASB) and the U.S. Securities and Exchange Commission (SEC) are paying close attention to the IASB. The FASB's work on convergence with the IASB since 2002 was strengthened in 2006 with a Memorandum of Understanding (MoU) and again in 2010 with an updated MoU. In 2007 the SEC took a significant step and published a Roadmap to Convergence, affecting all publicly traded companies.

All of these events are positive steps, but they drew heavy political pressure to the FASB and the IASB. The two organizations battled Congress and the EU against political pressures to issue accounting rules to fit the current economic climate instead of holding to time-tested principles that produce the "right" answer rather than the popular one. Standards setters must be diligent to look beyond current events and recent crises to a set of accounting principles that can grow with the world's economies, even if, in certain times, they might not produce favorable answers.

Accounting students and young accounting professionals should be paying particular attention to IFRSs and convergence with the FASB. It will not take the SEC's adoption of IFRS to change the rules. The American Institute of CPAs (AICPA) already has independently recognized the IASB's standards for small- and medium-sized entities. IFRSs will be worked into the CPA exam beginning in January 2011. Accounting professions may risk missing out on opportunities if they are not abreast of the current accounting climate.

To answer the question, "Who is the IASB?" It is a force to be reckoned with for accountants.