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Over the years, accounting standards have been developed by different accounting authorities. These
standards set the rules to be followed in the practice of accountancy.
The ultimate purpose of accounting standards is to establish a common set of procedures and rules in
preparing financial statements, thereby preventing misunderstandings between and among the preparers
and users of accounting information.
As we have said in the previous topic, financial accounting is concerned with the preparation of financial
statements in accordance with generally accepted accounting principles or GAAP. So, what is GAAP?
Accordingly, IFRS consists of the IAS that were retained and new IFRS. As of now there are 41
standards: IAS 1, 2, 7, 8, 10, 11, 12, 16 to 21, 23, 24, 26, 27, 28, 29, 32, 33, 34, 36 to 41, and IFRS 1 to
13.
Where are IAS 3, 4, 5, and the other missing IAS? They have been fully withdrawn and superseded by
the latest standards. For example: IAS 3 on Consolidated Financial Statements is now under IAS 27 and
28; IAS 4 Depreciation Accounting is now under IAS 36; IAS 22 Business Combinations has been
replaced by IFRS 3, etc.
Conclusion
Generally accepted accounting standards set the rules and procedures to be followed when preparing
and interpreting financial statements.
The two most influential bodies when it comes to setting accounting standards are: the Financial
Accounting Standards Board (FASB) in the United States, and the International Accounting Standards
Board (IASB) based in London, England.
Accounting standards vary in different countries; however, there is a current move towards worldwide
adoption of the International Financial Reporting Standards (IFRS).