fa accounting standards
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Accounting StandardsTRANSCRIPT
CHAPTER 3 ACCOUNTING STANDARDSAt the end of this chapter you will be conversant with:
3.1 Meaning of Accounting Standards
3.2 International Accounting Standards
3.3 List of accounting standards issued by IASC
3.4 Auditors duties in relation to accounting standards
3.5 Accounting Standards Issued By ASB of the Institute of Chartered Accountants of India
3.1 MEANING OF ACCOUNTING STANDARDS
An accounting standard is a selected set of accounting policies or broad guidelines regarding the principles & methods to be chosen out of several alternatives. Accounting Bodies all over the world have tried to achieve some uniformity in the accounting policies by prescribing certain accounting standards in order to narrow the range of alternatives available to an organization in respect of collection and presentation of accounting information.
The main objective of accounting standards is to harmonize the diverse accounting policies and practices & ensure comparability of accounts because of uniformity in their presentation.3.2 INTERNATIONAL ACCOUNTING STANDARDS
Accounting Bodies throughout the world are striving to achieve a reasonable degree of uniformity in the accounting policies by prescribing certain accounting standards with respect to collection and presentation of accounting information. To formulate the accounting standards, they have established a committee called the International Accounting Standards Committee (IASC) in 1973. Accounting bodies of most of the countries, including the Institute of Chartered Accountants of India, are members of this body and these members have resolved to conform to the standards developed by IASC, subject to variations needed due to local conditions or laws.
The objectives of the committee according to its constitution are:
a. formulating, publishing and promoting the use of the accounting standards worldwide, and
b. to work for the improvement and harmonization of regulations, accounting standards and procedures relating to financial statements
The International Accounting Standards have assumed great importance in recent times for the following reasons:
a. Globalization of the economy has led to Indian companies expanding their operations across the borders and this calls for uniformity in accounts of units located in different countries.
b. Foreign investors would give more weightage to the accounts of those companies which are based on International Accounting Standards.
If there is a conflict between the International Accounting Standards and the local standards or the local laws and regulations, the local standards, laws and regulations will prevail.
3.3 The list of accounting standards issued by the IASC is given below:
IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Cash Flow Statements
IAS 8 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies
IAS 10 Events after the Balance Sheet Date
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 14 Segment Reporting
IAS 15 Information Reflecting the Effects of Changing Prices
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 22 Business Combinations
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Consolidated Financial Statements
IAS 28 Investments in Associates
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions
IAS 31 Financial Reporting of Interests in Joint Ventures
IAS 32 Financial Instruments: Disclosure and Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 35 Discontinuing Operations
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
3.4 AUDITORS DUTIES IN RELATION TO ACCOUNTING STANDARDSIn case the company does not conform to any of the mandatory accounting standards, the auditor will have to qualify his report justifying his deviation. In case he fails to do so the ICAI can take disciplinary action against him on the ground of professional misconduct.
3.5 ACCOUNTING STANDARDS ISSUED BY ASB OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(AS 1) Disclosure of Accounting Policies
(AS 2) Valuation of Inventories
(AS 3) Cash Flow Statements
(AS 4) Contingencies and Events Occurring after the Balance Sheet Date
(AS 5) Net Profit or Loss for the Period, Prior Period and Extraordinary Items and Changes in Accounting Policies
(AS 6) Depreciation Accounting
(AS 7) Construction Contracts (Revised Accounting Standard)
(AS 8) Accounting for Research and Development
(AS 9) Revenue Recognition
(AS 10) Accounting for Fixed Assets
(AS 11) (Revised 2003), The Effects of Changes in Foreign Exchange Rate
(AS 12) Accounting for Government Grants
(AS 13) Accounting for Investments
(AS 14) Accounting for Amalgamations
(AS 15) Accounting for Retirement Benefits in the Financial Statement of Employers
(AS 16) Borrowing Costs
(AS 17) Segment Reporting
(AS 18) Related Party Disclosures
(AS 19) Leases
(AS 20) Earnings Per Share
(AS 21) Consolidated Financial Statements
(AS 22) Accounting for Taxes on Income
(AS 23) Accounting for Investments in Associates in Consolidated Financial Statements
(AS 24) Discontinuing Operations
(AS 25) Interim Financial Reporting
(AS 26) Intangible Assets
(AS 27) Financial Reporting of Interests in Joint Ventures
(AS 28) Impairment of Assets
(AS 29) Provisions, Contingent Liabilities and Contingent Assets