Advance Financial Accounting

Running Head: ADVANCE FINANCIAL ACCOUNTING
ADVANCE FINANCIAL ACCOUNTING
Name of the Student
Name of the University
Author Note

1ADVANCE FINANCIAL ACCOUNTING
Table of Contents
Introduction................................................................................................................................2
Analysis......................................................................................................................................3
Standard Setting Process of IASB for IFRS..........................................................................3
Motivations for Lobbying in the Accounting Standard Setting Process................................4
Conclusion & Recommendations...............................................................................................9
Reference..................................................................................................................................11

2ADVANCE FINANCIAL ACCOUNTING
Introduction
The International Accounting Standards Board has been emerged from the board of
committee’s restructuring of the International Accounting Standard for seeking to establish
the high quality of the IFRS as well as for engineering the convergence at the level with that
of the eight other major standard setters around the world with the legitimate process of
collaborations. In the path of IASB, there is one obstacle of “political pressure”. Here,
political is referred as pledging by the preparers an or the self-interested considerations,
which may be detrimental to investor’s interests and to the other users. The well-resourced
standard setters, educational institutions, organizations of international accounting as well as
major international companies are able to provide IASB with the direct opportunities of
lobbying. The IFRS legitimacy is questionable in case if the due process of the standard
setting is perceived as invalid (Ifrs.org. 2019). The financial crisis of the world has exposed
the weaknesses in the due process of the IFRS when the standard was amended by the IASB
without following the processes. There are two dimensions of the accounting standards
processes. The first dimension is consist of the technical aspect and the second aspect is
consists of the political aspects (Wingard, Bosman and Amisi 2019). Whether the national or
the international bodies formulate the accounting standard, they have to take approval from
the respective government that includes the political process complexity. The standard of
accounting that is favorable enough to the respective government, then they are usually
accepted and those accounting standard that are unfavorable to government are unapproved
and being asked for the changes alleging different loopholes (Young 2014). Therefore, this
assignment has the purpose for assessing the influence on due processes of the setting of
standard with the financial reporting legitimacy that is IFRS. Moreover, this assignment will
include the discussion on the process of standard setting of the IASB for the IFRS. Lastly,

3ADVANCE FINANCIAL ACCOUNTING
discussion will also be done on the critical review of lobbying in the accounting standard
setting process.
Analysis
Standard Setting Process of IASB for IFRS
The development of the IFRS is done by the process of international consultation that
is the due process that involves the organizations as well as interested individuals from all
around the world. This due process includes six stages with Trustees of IFRS Foundations
that have the opportunity for ensuring the compliance at the different point throughout. The
processes includes setting of the process, planning of the project, developing as well as
publishing of the discussing paper and developing as well as publishing of the exposure draft.
It also includes developing as well as publishing of accounting standard and lastly after the
standard has been issued, the unanticipated issues are being resolved by holding the regular
meetings with the interested parties (Álvarez, Calvo and Mora 2014).
IASB aims for developing the financial reporting standards of high quality that
addresses the demand for the better quality of the information, which is having value to the
users of the financial reports. While deciding if the agenda that is proposed is addressing the
needs of the users, IASB considers quality, relevance to users, increasing convergence,
resource constraints and existing available guidance. IASB discusses as well as raises the
items of potential agenda in respect of the comments from the other interested parties, other
standard setters, IFRS Advisory Council, IFRS Interpretations committee as well as other
recommendations (Allen, Ramanna and Roychowdhury 2018). The next step of standard
setter is planning the project that includes assessing the issue, which is against the criteria
such as clarifying, correcting, completion on the timely basis and considerations of the
proposed changes. The next step includes publishing of the discussion paper that consist of