The international system for regulating financial reporting and, more generally, governing financial regulation is currently in a state of flux, as governments and regulators respond to the problems revealed by the global financial crisis which started in 2008.
At the level of corporate financial reporting, the institutional structure is similar in many ways to that at the national level.
The International Financial Reporting Standards (IFRS) are set by the International Accounting Standards Board (IASB, an independent body). With regard to standards that apply specifically to accounting paractitioners, these include the International Standards on Auditing (ISA), the International Accounting Education Standards (IES) and the Code of Ethics for Professional Accountants. These are set respectively by the International Audit and Assurance Standards Board (IAASB), the International Accounting Education Standards Board (IAESB) and the International Ethics Standards Board for Accountants (IESBA).
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The various national bodies responsible for public oversight of auditors and auditing (public oversight boards or POBs) are brought together at the international level in the International Federation of Independent Audit Regulators (IFIAR).
The main international group bringing together the national professional accounting bodies is the International Federation of Accountants (IFAC). IFAC continues to have the main role is setting international standards in auditing, accounting education and business ethics, hosting the IAASB, the IAESB and the IESBA (see above). In order to maintain public confidence that IFAC was carrying out its wider responsibilities well, the Public Interest Oversight Board (PIOB) has overseen IFAC’s public interest activities since 2005. The members of the PIOB are independent of IFAC and are appointed by the main international financial regulators, the World Bank and the European Commission.
Separately, the BCBS, IOSCO and IAIS had set up the Joint Forum in 1996 to deal with issues that were common to the three sectors, especially the supervision of financial conglomerates.
The international financial crisis revealed the limitations of this structure, which was dominated by the G7/G8 (Canada, France, Germany, Italy, Japan, the UK and the US made up the G7; the group became the G8 by including Russia) and excluded China and other rapidly growing developing countries. In response, since 2008 the role of the G7/G8 in global economic issues has effectively been replaced by the G20, which brings together the 19 largest economies in the world (the G7 plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, the Republic of Korea, Turkey) and the EU. Reflecting this change, the membership of the FSF was greatly expanded in 2008 and it was renamed the Financial Stability Board (FSB).
The FSB is now the main body responsible for overseeing the reforms to the international financial system in the wake of the financial crisis and regularly reports to the G20 on progress. However, most of the detailed work involved in putting together new standards and regulations is carried out by more specialized bodies. So, the new Basel III rules for banks were drawn up by the Basel Committee, while the G20’s aim of achieving greater convergence between US and international accounting standards is the responsibility of the IASB and the Financial Accounting Standards Board (FASB, the US standard setter).