Financial Accounting · Key principles and concepts of accounting

Role of the IASB and IFRS Foundation Explained

Updated 11 October 2026 · Fact-checked

Accounting standards are agreed rules that set how transactions are recognised, measured and disclosed. The IFRS Foundation oversees and funds the system. The IASB issues IFRS Accounting Standards. The IFRS Interpretations Committee clarifies how they apply. Together they make financial statements consistent and comparable. In the exam, match each body to its role.

Understand Regulatory Framework and Accounting Standards Overview

Financial statements are only useful if users can trust them and compare them. Without common rules, two identical businesses could report very different profits. Accounting standards fix this. They set out how to recognise, measure, present and disclose items in the financial statements.

The system has a clear structure. The IFRS Foundation is the independent not-for-profit organisation at the top. It oversees the work, appoints the members of the other bodies and arranges funding. It does not write the standards itself.

The International Accounting Standards Board (IASB) is the standard-setting body. It develops and issues IFRS Accounting Standards, after following a due process that includes public consultation. The IFRS Interpretations Committee (IFRS IC) deals with questions on how a standard applies in practice. It publishes interpretations where practice is varied or unclear. The IFRS Advisory Council is the formal advisory body. It gives the IASB advice and input from a wide range of stakeholders, such as preparers, users and regulators.

The naming causes confusion. Standards issued by the IASB's predecessor body are called IAS (International Accounting Standards), for example IAS 2 Inventories and IAS 16 Property, Plant and Equipment. Standards issued by the IASB are called IFRS, for example IFRS 15 Revenue from Contracts with Customers. Today both sets are in force and together are called IFRS Accounting Standards. The IASB does not enforce standards. Enforcement is a matter for national law, regulators and stock exchanges in each country.

Standards support consistent reporting by reducing the choices available, requiring disclosure and giving users comparable information across companies and countries. They also help investors, lenders and other users make decisions, and they reduce the scope for manipulation by management.

Key formulas to remember

IFRS Foundation: Oversees, appoints and funds; does not set standards; Governance and oversight body. Do not pick it as the standard-setter.
IASB: Develops and issues IFRS Accounting Standards; The standard-setting body. Follows due process and consults publicly.
IFRS Interpretations Committee: Issues interpretations where application is unclear; Deals with specific application issues, not new standards.
IFRS Advisory Council: Advises the IASB on priorities and views of stakeholders; Advisory only. It has no power to issue standards.
IAS vs IFRS: IAS = older standards; IFRS = standards issued by the IASB; Both are part of IFRS Accounting Standards and both are in force unless withdrawn.

How to solve Regulatory Framework and Accounting Standards Overview questions

Most questions on this topic ask you to match a body to a role or to judge whether a statement is true. Use this method.

1Read the question and find the key verb: oversee, issue, interpret, advise or enforce.
2Match the verb to the body: oversee and fund is the IFRS Foundation, issue is the IASB, interpret is the IFRS IC, advise is the IFRS Advisory Council.
3If the question mentions enforcement, remember that it is done by national law, regulators or stock exchanges, not the IASB.
4For IAS or IFRS questions, check who issued the standard and when: IAS from the earlier body, IFRS from the IASB.
5For why-standards-are-needed questions, link your answer to comparability, consistency, reliability and user decisions.
6Eliminate options that give a body a role belonging to another body, then pick the one left.

Quickest way: Verb-matching shortcut

When to use it: Use it for multiple choice and multiple response questions on the roles of the standard-setting bodies.

Underline the action word in the question.
Link it: Foundation = oversee, IASB = issue, IFRS IC = interpret, Advisory Council = advise.
Reject any option where the body does something that belongs to another body.
For multiple response, select exactly the stated number of options.

Common mistakes in Regulatory Framework and Accounting Standards Overview

Saying the IFRS Foundation issues the standards.
The name sounds like the top authority, so students assume it writes the rules.
Fix: Remember that the Foundation oversees and funds. The IASB issues the standards.
Thinking the IASB enforces compliance with IFRS.
Students link setting rules with policing them.
Fix: Enforcement sits with national law, regulators and stock exchanges. The IASB only sets standards.
Treating IAS as outdated and no longer applicable.
The word older suggests replaced.
Fix: IAS standards remain in force unless withdrawn or replaced. IAS 2, IAS 16 and IAS 37 are examined in this paper.
Confusing the IFRS IC with the IASB.
Both publish documents about standards.
Fix: The IFRS IC interprets how existing standards apply. The IASB develops and issues the standards themselves.
Giving a vague answer on why standards are needed, such as to make accounts correct.
Students skip the link to users.
Fix: Name specific benefits: comparability, consistency, reliability and better decisions by users.

Worked examples

Example 1

Which ONE of the following bodies is responsible for developing and issuing IFRS Accounting Standards?

A IFRS Foundation
B IASB
C IFRS Interpretations Committee
D IFRS Advisory Council

Show the solution

The key verb is developing and issuing standards.
The IFRS Foundation oversees and funds, so A is wrong.
The IFRS IC interprets existing standards, so C is wrong.
The IFRS Advisory Council only advises, so D is wrong.
The IASB is the standard-setting body.

Answer: B: the IASB.

Example 2

Which TWO of the following statements about accounting standards are correct?

A The IASB is responsible for enforcing compliance with IFRS in every country.
B Standards help make financial statements of different entities comparable.
C IAS are standards issued by the IASB's predecessor body and may still be in force.
D The IFRS Foundation writes each individual standard.

Show the solution

A is false. Enforcement is by national law, regulators and stock exchanges.
B is true. Common rules reduce differences in treatment, so users can compare entities.
C is true. IAS came from the predecessor body and many, such as IAS 2, are still in force.
D is false. The Foundation oversees; the IASB writes standards.

Answer: B and C are correct.

Exam tips

Learn one verb for each body and use it to match roles in seconds.
Watch for options that give the IASB an enforcement role. They are usually wrong.
Know a few IAS and IFRS examples by number and name, as they link to other topics in the paper.
In multiple response questions, select exactly the number requested. Extra choices will not earn the marks.
Reasons for standards almost always come down to comparability, consistency and reliability for users.

Practice questions from Key principles and concepts of accounting

Regulatory Framework and Accounting Standards Overview in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Regulatory Framework and Accounting Standards Overview: frequently asked questions

What is the difference between IAS and IFRS?

IAS were issued by the earlier standard-setting body. IFRS are issued by the IASB. Both are part of IFRS Accounting Standards, and the IAS that have not been withdrawn still apply.

What does the IASB do?

The IASB develops and issues IFRS Accounting Standards after following a due process that includes consultation. It does not enforce them.

Why are accounting standards needed?

They give consistent rules for recognising, measuring and disclosing items. This makes financial statements reliable and comparable, so users can make better decisions.

What is the role of the IFRS Interpretations Committee?

It considers questions on how existing standards apply in practice and provides interpretations where practice is unclear or varied. It does not set new standards.