Over most of its twenty-eight-year existence, the IASC has been focused on the task of developing or endorsing existing standards which are pertinent to general-purpose financial reporting. In the more recent of these years, completion of the core set of standards, which too was oriented toward general-purpose financial statement needs, has been of paramount importance. The special needs of individual industries have, of necessity, received very little attention.
Having essentially completed that task of producing this core set of standards, and having received endorsements from the European Commission and, with some caveats, from IOSCO, and having successfully restructured its operations to gain further support from key standard-setting bodies (particularly the US's FASB), the IASC is now turning greater attention to the financial reporting needs of specialized industries. Apart from banking (which has been subject to expanded disclosure rules for several years and has been addressed earlier in this chapter), specialized industries have received virtually no previous attention from the IASC. This is now changing, with a major project on agriculture having culminated in a new standard (IAS 41), and with new projects on insurance and the extractive industries in various stages of completion.
Agriculture, the first industry to be given a comprehensive financial reporting model (banking was given only expanded disclosure rules), has received a great deal of attention from IASC. A draft statement of position was issued about five years ago, marking the first real attention paid to one of the world's most prominent economic activities by any of the world's accounting rule-making bodies. For developing nations, agriculture is indeed disproportionately significant, and given the IASC's role in establishing financial reporting standards for those nations, the focus on agriculture was perhaps to be expected.
IAS 41, Agriculture, has the distinction of being the final standard approved by the former IASC before the restructuring approved in 2000 became effective, with a newly constituted International Accounting Standards Board (IASB) taking over as the rule-making body of the IASC. IAS 41 becomes effective for financial statements covering periods beginning on or after 1 January 2003.
IAS 41 is significant because it will effect major change in the financial reporting for a highly significant economic sector, and furthermore because it represents perhaps the most comprehensive break with historical cost accounting made to date. In some ways, IAS 41 is even more significant than the standards which over the past several years have departed from the historical cost convention for purposes of reporting changes in values of financial instruments. Fair values for agricultural products, unlike for most financial instruments, are not immediately obtainable (e.g., from quotation bureaus).
The new standard is explained in detail in the following pages.