The International Accounting Standards Board (IASB) and the International Federation of Accountants (IFAC) have announced a formal agreement to strengthen their co-operation in developing private and public sector accounting standards.

The move follows the IFRS Foundation Trustees’ strategy review, which called for greater interaction between the IASB and other accounting standard-setting authorities.

IFAC supports the independent International Public Sector Accounting Standards Board (IPSASB), which is responsible for developing International Public Sector Accounting Standards (IPSASs).

The boards have worked together in the past, and many IPSASs are primarily drawn from IFRSs. The new agreement, which is in the form of a Memorandum of Understanding (MoU), is designed to ensure greater consistency in their respective standard-setting activities.

The MoU also acknowledges the ongoing working relationship between the IASB and the International Auditing and Assurance Standards Board (IAASB), which is also supported by IFAC. As part of this relationship, the IAASB seeks to advise the IASB on issues surrounding verifiability and auditability of proposed accounting standards.

Hans Hoogervorst, chairman of the IASB, said: ‘The ongoing financial crisis has shown the importance of transparency in financial reporting by both private and public sector entities. This agreement strengthens the already close ties between the IASB and the IFAC and will serve as a platform for further co-operation.’