Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is the primary goal of the International Accounting Standards Board (IASB)?

1. To develop local accounting practices

2. To establish global accounting standards

3. To enforce tax regulations internationally

4. To provide education on accounting principles

The correct answer is: To establish global accounting standards

The primary goal of the International Accounting Standards Board (IASB) is to establish global accounting standards. This objective stems from the need for consistency and comparability in financial reporting across different countries and industries. By creating standardized guidelines, the IASB aims to enhance the transparency of financial statements, which is vital for stakeholders such as investors, analysts, and regulators who often work with companies operating in various jurisdictions. The development of global standards helps address the challenges posed by the multitude of local accounting practices that can lead to confusion and hinder international investment. By having a set of universally accepted standards, the IASB facilitates better decision-making and improves the overall efficiency of capital markets. The adoption of International Financial Reporting Standards (IFRS) is a key initiative of the IASB that reflects this goal. In contrast, local accounting practices focus on the specific needs and regulations of individual countries and do not prioritize global consistency. Tax regulations are separate from accounting standards and are typically enforced by national governments rather than an international body like the IASB. While education on accounting principles is important for practitioners and students, it is not the primary goal of the IASB, which is more focused on standard-setting than educational initiatives.