Organizations Related to Accounting

Various organizations play an important role in the development, regulation, education, and standardization of the accounting profession. These organizations include professional accounting bodies, accounting firms, and accounting standard-setting bodies.

Professional Accounting Bodies

Professional accounting bodies are organizations that promote the accounting profession and maintain professional standards. They provide education, training, professional qualifications, and guidance to accountants.

Some of the major professional accounting bodies are:

  • American Institute of Certified Public Accountants (AICPA)
  • International Federation of Accountants (IFAC)
  • Institute of Chartered Accountants of Scotland (ICAS)
  • Institute of Chartered Accountants of Pakistan (ICAP)
  • CPA Australia
  • Institute of Chartered Accountants of India (ICAI)
  • Association of Chartered Certified Accountants (ACCA)
  • Institute of Chartered Accountants in England and Wales (ICAEW)

The International Federation of Accountants (IFAC) has 179 member organizations from different countries.

In some countries, there is only one professional accounting body, while in other countries, separate professional bodies exist for different branches of accounting.

Examples include:

  • Chartered Institute of Management Accountants (CIMA) in the United Kingdom.
  • Institute of Management Accountants (IMA) in the United States.

These professional bodies conduct educational programmes, provide practical training, administer professional examinations, and award professional qualifications. They also grant accounting designations such as Certified Public Accountant (CPA) and Chartered Accountant (CA).

Accounting Firms

Accounting firms are organizations that provide professional accounting, auditing, taxation, and related financial services.

Depending on the size of a company, the law may require its financial statements to be audited by a qualified auditor. Such audits are generally carried out by accounting firms.

Accounting firms expanded rapidly in the United States and Europe during the late nineteenth and early twentieth centuries. Through several mergers, many firms became large international organizations by the middle of the twentieth century.

Further mergers during the late twentieth century resulted in the dominance of the auditing market by the Big Five accounting firms:

  • Arthur Andersen
  • Deloitte
  • Ernst & Young (EY)
  • KPMG
  • PricewaterhouseCoopers (PwC)

Later, Arthur Andersen ceased operations following the Enron scandal. As a result, the Big Five became the Big Four accounting firms, namely:

  • Deloitte
  • Ernst & Young (EY)
  • KPMG
  • PricewaterhouseCoopers (PwC)

Standard-Setting Bodies

Accounting standards provide common rules and principles for preparing financial statements. These standards help ensure consistency, reliability, and comparability in financial reporting.

Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles (GAAP) are accounting standards issued by national regulatory bodies. These principles guide the preparation and presentation of financial statements within a country.

International Accounting Standards Board (IASB)

The International Accounting Standards Board (IASB) issues the International Financial Reporting Standards (IFRS).

The IFRS are implemented in 147 countries and aim to achieve uniformity and comparability in financial reporting across the world.

Standard-Setting Boards Supported by IFAC

The International Federation of Accountants (IFAC) supports several independent standard-setting boards that develop international standards in different areas of accounting.

International Auditing and Assurance Standards Board (IAASB)

The International Auditing and Assurance Standards Board (IAASB) develops international standards related to:

  • Auditing
  • Assurance services
  • Quality control

International Ethics Standards Board for Accountants (IESBA)

The International Ethics Standards Board for Accountants (IESBA) develops the Code of Ethics for Professional Accountants based on internationally accepted ethical principles.

International Accounting Education Standards Board (IAESB)

The International Accounting Education Standards Board (IAESB) develops standards relating to professional accounting education and training.

International Public Sector Accounting Standards Board (IPSASB)

The International Public Sector Accounting Standards Board (IPSASB) develops accrual-based international accounting standards for the public sector.

National Standard-Setting Bodies

Many countries have their own organizations that issue accounting standards suitable for their national requirements while keeping them aligned with international standards.

Australia

In Australia, the Australian Accounting Standards Board (AASB) issues accounting standards that are consistent with the International Financial Reporting Standards (IFRS).

United States

In the United States, the Financial Accounting Standards Board (FASB) issues the Statements of Financial Accounting Standards, which form the basis of U.S. GAAP.

United Kingdom

In the United Kingdom, the Financial Reporting Council (FRC) is responsible for issuing accounting standards.

Adoption of IFRS

As of 2012, all major economies had plans either to adopt or converge with the International Financial Reporting Standards (IFRS). This reflects the global effort to achieve uniform accounting standards and improve the comparability of financial statements across different countries.