The IASC was created by national accountancy bodies from a number of countries with a view to harmonizing the international diversity of company reporting practices.
Between its founding in 1973 and its dissolution in 2001, it developed a set of International Accounting Standards (IAS) that gradually acquired a degree of acceptance in countries around the world.
The IASC was founded as a result of an agreement between accountancy bodies in the following countries:[1] Membership of the committee (later known as the board) was on an institutional, not at an individual basis.
Because of an agreement reached in 1981 between IFAC and the IASC, the founding member bodies continued to be reappointed (with the exception of Mexico in 1987) and de facto retained their permanent seats.
The technical agenda of the board was prepared by working groups known as steering committees, each appointed to develop proposals for a new or modified standard on a specific topic.
Steering committee membership was on an individual, not institutional, basis, but appointment was based on recommendation by an IASC member body, industry organization or similar grouping.
For instance, IAS 2 Valuation and Presentation of Inventories in the Context of the Historical Cost System (1975) allowed a variety of practices including the LIFO, FIFO and base stock methods.
[9] In 1987, the IASC adopted a new strategy of strengthening its standards to make them a suitable basis for financial reporting by companies seeking cross-border stock market listings.
[10] In doing so, it was encouraged by the International Organization of Securities Commissions (IOSCO) which in 1988 signaled its willingness to consider an improved set of IAS as the basis for preparing financial information in multinational prospectuses.
[15] The efforts of the IASC, from 1987 onwards, to improve its standards in order to make them an acceptable basis for cross-border listings led to greater recognition.
During the 1990s, a number of major European companies began to prepare financial statements on the basis of US GAAP because of actual or planned listings in the United States.
In 1998, German companies were allowed to satisfy their legal reporting requirements in Germany by publishing consolidated financial statements based on 'internationally recognized principles of accounting', which in practice meant either US GAAP or IAS.