IFRS Regulatory Framework: Complete Structure Guide

The Regulatory Framework of IFRS: Who Makes the Rules and How

When you study IFRS, you learn about individual standards – IFRS 9, IFRS 15, and IFRS 16. But have you ever wondered who creates these standards? How do they become "the rules" that companies in 140+ countries must follow?

Understanding the regulatory Framework of IFRS is essential for any finance professional. It explains where standards come from, how they are developed, who oversees them, and how enforcement works across different jurisdictions.

After 25+ years of working with IFRS and coaching thousands of professionals for the ACCA Diploma in IFRS, I have seen how this knowledge helps them navigate the complexities of global financial reporting. This article breaks down the entire Framework in plain language.

Watch a video explanation 

The IFRS Foundation: The Parent Organisation

At the top of the IFRS structure sits the IFRS Foundation – an independent, not-for-profit organisation incorporated in the United States (Delaware) in 2001.

The IFRS Foundation's mission is to develop high-quality, understandable, enforceable and globally accepted accounting and sustainability disclosure standards.

What the IFRS Foundation Does

• Provides governance and oversight for standard-setting
• Secures funding for operations
• Promotes the adoption and consistent application of IFRS globally
• Ensures the independence of the standard-setting boards

The Foundation itself does not create accounting standards. That responsibility belongs to the boards that operate under its umbrella.

The Three-Tier Governance Structure

The IFRS Foundation operates a three-tier governance structure designed to ensure accountability, independence andpublic interest focus:

Let me explain each tier in detail.

Tier 1 – The Monitoring Board

The Monitoring Board provides a formal link between the IFRS Foundation Trustees and public authorities.

Members

The Monitoring Board consists of capital market authorities responsible for setting the form and content of financial reporting in their jurisdictions:

• International Organization of Securities Commissions (IOSCO)
• European Commission
• Financial Services Agency of Japan
• US Securities and Exchange Commission (SEC)
• Brazilian Securities Commission (CVM)
• Financial Services Commission of Korea
• Ministry of Finance of the People's Republic of China

Responsibilities

• Approve and oversee the nomination process for Trustees
• Approve appointments of Trustees
• Ensure the Trustees fulfil their responsibilities as set out in the IFRS Foundation Constitution
• Provide a mechanism for public accountability

The Monitoring Board does not get involved in technical standard-setting; it focuses solely on governance oversight.

Tier 2 – The IFRS Foundation Trustees

The Trustees are the governing body of the IFRS Foundation. There are currently 22 Trustees appointed from diverse geographical regions and professional backgrounds.

Composition

The Constitution requires geographical balance:

• 6 Trustees from Asia-Oceania
• 6 Trustees from Europe
• 6 Trustees from the Americas
• 1 Trustee from Africa
• 3 Trustees from any region (to maintain overall balance)

Trustees serve renewable three-year terms.

Responsibilities

• Governance and strategy – Set the strategic direction of the Foundation
• Funding – Ensure adequate financing for operations
• Due process oversight – Ensure proper consultation and transparency in standard-setting
• Appointments – Appoint members of the IASB, ISSB, IFRS Interpretations Committee and Advisory Council
• Independence – Safeguard the independence of the standard-setting boards

Importantly, Trustees are not involved in technical matters. They do not influence the content of specific standards – that is the exclusive domain of the boards.

Tier 3 – The Standard-Setting Boards

International Accounting Standards Board (IASB)

The IASB is responsible for developing and publishing IFRS Accounting Standards. It is the body that creates the standards you study in DipIFR and apply in practice.

Composition:

• 14 board members (may be increased to 15)
• Full-time and part-time members
• Appointed for renewable five-year terms
• Technical experts with diverse backgrounds (auditors, preparers, users, academics, regulators)

Responsibilities:

• Develop and issue IFRS Accounting Standards
• Approve Interpretations developed by the IFRS Interpretations Committee
• Issue the IFRS for SMEs Accounting Standard
• Maintain and update existing standards

The IASB has sole responsibility for standard-setting. Neither the Trustees nor the Monitoring Board can override its technical decisions.

For a complete list of IASB standards, see my IFRS standards list.

International Sustainability Standards Board (ISSB)

Established in November 2021, the ISSB develops IFRS Sustainability Disclosure Standards. This is a relatively new addition to the Framework, reflecting the growing importance of ESG reporting.

Key standards issued:

• IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2 – Climate-related Disclosures

The ISSB operates alongside the IASB under the same governance structure, focusing specifically on sustainability reporting.

Supporting Bodies

IFRS Interpretations Committee

The IFRS Interpretations Committee (formerly IFRIC) supports the IASB by:

• Developing interpretations of IFRS Standards for IASB approval
• Guiding on issues not specifically addressed in standards
• Addressing divergence in practice

Interpretations issued by the Committee (once approved by the IASB) have the same authority as standards themselves.

IFRS Advisory Council

The IFRS Advisory Council provides strategic advice to the IASB, the ISSB, and the Trustees. It includes representatives from:

• Preparers (companies)
• Users (investors, analysts)
• Auditors
• Academics
• Regulators
• Standard-setters from various countries

The Advisory Council helps ensure that standard-setting considers the perspectives of all stakeholders.

Accounting Standards Advisory Forum (ASAF)

The ASAF advises the IASB on technical matters. It consists of national and regional accounting standard-setters from around the world, facilitating collaboration between the IASB and local bodies.

The Standard-Setting Process (Due Process)

IFRS standards are not created overnight. The IASB follows a rigorous due process to ensure standards are high-quality and widely accepted.

The Six Stages

Why Due Process Matters

• Quality – Extensive consultation improves the quality of standards
• Legitimacy – Stakeholder input gives standards credibility
• Practicality – Feedback from preparers and users identifies implementation issues early
• Transparency – Open process builds trust in the standard-setting system

Understanding due process helps you appreciate why IFRS standards are structured the way they are. For deeper insights into IFRS principles, see my article on objectives of IFRS.

How IFRS Gets Adopted Around the World

The IASB issues standards, but it has no enforcement power. Adoption and enforcement happen at the jurisdictional level.

Methods of Adoption

Different jurisdictions adopt IFRS in different ways:

Enforcement

Local regulators, stock exchanges and auditors handle enforcement:

• Securities regulators review financial statements for compliance
• Stock exchanges may have listing requirements related to IFRS
• Auditors express opinions on whether financial statements comply with IFRS
• Professional bodies enforce ethical standards and quality control

For Indian professionals, understanding how Ind AS relates to IFRS is crucial. See my article on difference between IFRS and Ind AS.

The Role of the Conceptual Framework

The Conceptual Framework for Financial Reporting underpins all IFRS standards. It sets out:

• The objective of financial reporting
• Qualitative characteristics of useful information
• Definitions of elements (assets, liabilities, equity, income, expenses)
• Recognition and measurement concepts

The IASB uses the Conceptual Framework when developing new standards to ensure consistency across IFRS. For more on the Framework, see my article on Conceptual Framework for Financial Reporting.

Why Understanding the Regulatory Framework Matters

For Exams

DipIFR and SBR exams sometimes ask about governance, due process or the relationship between the IASB and other bodies. Understanding the Framework helps you answer these questions confidently.

For Practice

Knowing where standards come from helps you:

• Anticipate future changes by monitoring IASB projects
• Understand why certain requirements exist
• Navigate differences between IFRS and local GAAP
• Participate in consultation processes if your organisation wishes to comment on exposure drafts

For Career Development

Employers value professionals who understand the "big picture" of financial reporting, not just individual rules. This knowledge is particularly valuable for roles in:

• Technical accounting
• Financial reporting policy
• Regulatory affairs
• Group consolidation

For career guidance, see my article on IFRS certification after CA.

Recent Developments in IFRS Governance

Establishment of the ISSB (2021)

The creation of the International Sustainability Standards Board marked a major expansion of the IFRS Foundation's scope beyond traditional financial reporting into sustainability disclosure.

Consolidation with CDSB and VRF (2022)

The IFRS Foundation consolidated the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (which included SASB) to create a comprehensive sustainability reporting framework.

Increased Focus on Connectivity

The IASB and ISSB are working together to ensure connectivity between financial and sustainability reporting, so users get a complete picture of an entity's value creation.

Key Takeaways

Exam and Interview Tips

Common exam questions:

• Describe the governance structure of the IFRS Foundation
• Explain the role of the IASB in standard-setting
• What is the purpose of due process?
• How are IFRS standards enforced?

Common interview questions:

• "How is IFRS different from local GAAP?"
• "Who creates IFRS standards?"
• "How does the IASB ensure standards meet user needs?"

Where to Get Official Information

This article shares practical insights from my coaching and advisory experience. For authoritative information on IFRS governance, refer to the official IFRS Foundation website at ifrs.org.

You can also access:

• The IFRS Foundation Constitution
• IASB and ISSB work plans
• Exposure drafts and discussion papers
• Due Process Handbook

Final Thoughts

The regulatory Framework of IFRS is a carefully designed system that balances independence, accountability andstakeholder input. Understanding this Framework helps you see IFRS standards not as arbitrary rules, but as carefully considered solutions to financial reporting challenges.

Whether you are preparing for DipIFR, working in a multinational finance team or advising clients on IFRS adoption, this knowledge will make you a more effective professional.

Take the time to understand who creates the standards, how they are developed and how they are enforced in different jurisdictions. This "big picture" understanding is what separates good accountants from great ones.

About the Author

This article was written by Vicky Sarin, CA, Founder & CEO of Eduyush.com, with over 25 years of post-qualification experience in financial reporting, audit and global accounting education. Vicky has coached thousands of professionals for ACCA DipIFR and other IFRS certifications, with Eduyush students achieving world-class scores and consistently outperforming global pass rates in recent exam sessions.