ACCA Financial Reporting (F7) Practice Exam

What is the primary role of the IASB?

1. To audit financial statements

2. To develop and maintain International Financial Reporting Standards (IFRS)

3. To regulate stock exchanges

4. To review company financial performance

The correct answer is: To develop and maintain International Financial Reporting Standards (IFRS)

The primary role of the International Accounting Standards Board (IASB) is to develop and maintain International Financial Reporting Standards (IFRS). The IASB is an independent standard-setting body that aims to provide a framework for financial reporting that ensures transparency, accountability, and efficiency in financial markets. By creating and updating IFRS, the IASB fosters consistent accounting practices across different jurisdictions, which is crucial for comparability and reliability of financial information for investors, regulators, and other stakeholders. The development and maintenance of IFRS by the IASB allow companies around the world to prepare their financial statements according to shared principles, leading to improved financial communication and assessment of performance. This enhances the credibility of financial statements globally and helps in reducing the discrepancies that arise from different national standards. In contrast to auditing financial statements, regulation of stock exchanges, and reviewing company financial performance, these functions are not the core responsibilities of the IASB. Instead, they fall under the purview of various regulatory bodies and financial analysts in different markets. The IASB focuses specifically on accounting standards, which is essential for maintaining consistent and high-quality financial reporting internationally.