IASC in 1973 had recognized it as such. By the beginning of the twenty-first century,
in only one of the nine original IASC countries (Germany) did even a relatively small
number of listed companies use IASs as their primary basis of reporting to domestic
investors. In four of the nine (France, Germany, the Netherlands, and the United
Kingdom), nearly all listed companies will be required to do so by 2005, and even in
those countries national GAAP are likely to remain for unlisted companies. In Aus-
tralia, the government is considering a proposal to replace national GAAP with IASs.
In the others (Canada, Japan, Mexico, the United States), the prospects that IASs will
replace national GAAP for at least some domestic companies are still uncertain but—
it is fair to say—those prospects are growing.
Even now, U.S. companies that are subsidiaries of companies in Europe, Australia,
and wherever else international standards replace national GAAP are likely to have
to prepare financial information using international standards. Similarly, U.S.-owned
subsidiaries and investees in Europe, Australia, and elsewhere will soon have to com-
ply with international standards.
Also, more and more, countries that continue to develop their own GAAP are
adopting IASs almost verbatim (like South Africa, Singapore, Hong Kong, the
Phillippines). And many smaller countries have stopped developing national stan-
dards altogether, relying instead on IASs as their national GAAP. Examples include
Bahrain, Croatia, Cyprus, the Dominican Republic, Ecuador, Egypt (listed compa-
nies only), Haiti, Jamaica, Kenya, Malta, Nepal, Oman, Panama, Tajikistan, Tanza-
nia, and the Ukraine, and the United Arab Emirates (banks only). For the past few
years, foreign issuers and at least some domestic issuers in most European countries
have been permitted to prepare IAS consolidated financial statements instead of na-
tional GAAP statements. Some countries already allow domestic companies to
choose to follow IASs rather than national GAAP, for example, Hong Kong, Russia,
and Switzerland.
A complete history of the IASC (and its recent replacement, the IASB) is set out
in the appendix to this chapter.
(e) International Accounting Standards. From its inception in 1973 until it was re-
organized into the International Accounting Standards Board (IASB) in early 2001,
the IASC developed 41 standards. Many of these were revised one or more times
over the years. Several were superseded or merged in with other standards. Exhibit
16.2 sets out a complete list of the IASs promulgated by the IASC. Those not iden-
tified as superseded continue in force.
(f ) IASs Reflect a Principles-Based Approach. IASs reflect a principles-based ap-
proach to developing accounting standards, rather than a rules-based approach. Prin-
ciples-based standards focus on establishing general principles derived from a con-
ceptual framework, reflecting the recognition, measurement, and reporting require-
ments for the transactions covered by the standards. Few, if any, exceptions to the
principles are provided for. By following a principles-based approach, IASs tend to
limit additional guidance for applying the general principles to typical transactions,
encouraging professional judgement in applying the general principles to other trans-
actions specific to an entity or industry.
By having taken a principles-based approach, the IASC’s standards tend to have
far fewer application examples and “bright lines” than their U.S. counterparts. Also,
the number of published Interpretations of IASs is minuscule as compared to the
16 • 6 INTERNATIONAL FINANCIAL REPORTING STANDARDS