Accounting Standards in India: ASB & Companies Act Rules | Lecture notes Business Finance

statements should be prepared in compliance with the Accounting norms,e.g., the Companies Act, 1956(

Section 211). fiscal Statements can not be described as complying with the Accounting norms unless they

misbehave with all the conditions of each applicable Standard. It's the responsibility of the adjudicator to

form his opinion and to report on similar fiscal statements. The adjudicator while discharging his attest

functions has to insure that the account norms have been enforced in the donation of fiscal statements

covered by the adjudicators ‘ report. It's his responsibility to expose any diversions from similar norms

so that the druggies of the statements may be apprehensive of similar diversions. The Accounting norms

will be obligatory from the separate date( s) mentioned in the Accounting Standard( s). As per Section

211( 3A) of the Companies Act, 1956 every profit and loss account and balance distance of the company

shall misbehave with the account norms. Section 211( 3B) specifies that where the profit and loss account

and balance distance of the company don't misbehave with the account norms, similar company shall

expose in its profit and loss account and balance distance the following information ( a) the diversions

from counting norms; b) the reasons for similar diversions; and c) the fiscal goods if any, arising due

to similar divagation. -1 6 It's anticipated that the compliance of the account norms by all concerned

will ameliorate the quality of donation of fiscal statements and will also insure an adding degree of

uniformity. It'll also lead to provision of necessary information for proper understanding of the fiscal

statements of the business organisations. 7. ACCOUNTING norms BOARD Feting the need to harmonize

the different account programs and practices at present in use in India and keeping in view the

International developments in the field of account, the Council of the Institute of Chartered Accountants

of India constituted the Accounting norms Board( ASB) in April, 1977. The following are the objects of the

Accounting norms Board i) To conceive of and suggest areas in which Accounting norms need to be

developed. ii) To formulate Accounting norms with a view to aiding the Council of the ICAI in evolving

and establishing Accounting norms in India. iii) To examine how far the applicable International Accounting

Standard/ International Financial Reporting Standard can be acclimated while formulating the Accounting

Standard and to acclimatize the same. iv) To review, at regular intervals, the Accounting norms from the

point of view of acceptance or changed conditions, and, if necessary, revise the same. v) To give, from

time to time, interpretations and guidance on Accounting norms. vi) To carry out similar other functions

relating to Accounting norms. The main function of the ASB is to formulate Accounting norms so that

similar norms may be established in India. While formulating the Accounting norms, the ASB will take into

consideration the applicable laws, customs, exercises and business terrain prevailing in India. The

Accounting norms are formulated under the authority of the Council of the ICAI. The ASB has also been

entrusted with the responsibility of propagating the Accounting norms and of prevailing the concerned

parties to borrow them in the medication and donation of fiscal statements. The ASB will give

interpretations and guidance on issues arising from Accounting norms. The ASB will also review the

Accounting norms at journal intervals and, if necessary, revise the same. The composition of the ASB is

broad- grounded with a view to icing participation of all interest- groups in the standard- setting process.

These interest- groups include assiduity, representatives of colorful departments of government and

nonsupervisory authorities, fiscal institutions and academic and professional bodies. 8. Account norms

In India the Central Government in discussion with the National Committee on Accounting norms( NACAS)

has issued the Companies( Accounting norms) 7-1 Rules 2006. Under this Rules, Accounting norms( i.e.

1 to 7 and 9 to 29) have been notified In addition, the Ministry of Corporate Affairs has notified confluence

of 35 Indian Accounting norms with International Financial Reporting norms( hereafter called IND AS) on

February 25, 2011. These are- IND Burro 1, 2, 7, 8, 10, , 12, 16, 17, 18, 19, 20, 21, 23, 24, 27, 28, 29, 31,

32, 33, 34, 36, 37, 38, 39, 40, , 102, 103, 104, 105, 106, 107 and 108. These Accounting norms are yet to

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statements should be prepared in compliance with the Accounting norms,e.g., the Companies Act, 1956( Section 211). fiscal Statements can not be described as complying with the Accounting norms unless they misbehave with all the conditions of each applicable Standard. It's the responsibility of the adjudicator to form his opinion and to report on similar fiscal statements. The adjudicator while discharging his attest functions has to insure that the account norms have been enforced in the donation of fiscal statements covered by the adjudicators ‘ report. It's his responsibility to expose any diversions from similar norms so that the druggies of the statements may be apprehensive of similar diversions. The Accounting norms will be obligatory from the separate date( s) mentioned in the Accounting Standard( s). As per Section 211( 3A) of the Companies Act, 1956 every profit and loss account and balance distance of the company shall misbehave with the account norms. Section 211( 3B) specifies that where the profit and loss account and balance distance of the company don't misbehave with the account norms, similar company shall expose in its profit and loss account and balance distance the following information ( a) the diversions from counting norms; b) the reasons for similar diversions; and c) the fiscal goods if any, arising due to similar divagation. - 1 6 It's anticipated that the compliance of the account norms by all concerned will ameliorate the quality of donation of fiscal statements and will also insure an adding degree of uniformity. It'll also lead to provision of necessary information for proper understanding of the fiscal statements of the business organisations. 7. ACCOUNTING norms BOARD Feting the need to harmonize the different account programs and practices at present in use in India and keeping in view the International developments in the field of account, the Council of the Institute of Chartered Accountants of India constituted the Accounting norms Board( ASB) in April, 1977. The following are the objects of the Accounting norms Board i) To conceive of and suggest areas in which Accounting norms need to be developed. ii) To formulate Accounting norms with a view to aiding the Council of the ICAI in evolving and establishing Accounting norms in India. iii) To examine how far the applicable International Accounting Standard/ International Financial Reporting Standard can be acclimated while formulating the Accounting Standard and to acclimatize the same. iv) To review, at regular intervals, the Accounting norms from the point of view of acceptance or changed conditions, and, if necessary, revise the same. v) To give, from time to time, interpretations and guidance on Accounting norms. vi) To carry out similar other functions relating to Accounting norms. The main function of the ASB is to formulate Accounting norms so that similar norms may be established in India. While formulating the Accounting norms, the ASB will take into consideration the applicable laws, customs, exercises and business terrain prevailing in India. The Accounting norms are formulated under the authority of the Council of the ICAI. The ASB has also been entrusted with the responsibility of propagating the Accounting norms and of prevailing the concerned parties to borrow them in the medication and donation of fiscal statements. The ASB will give interpretations and guidance on issues arising from Accounting norms. The ASB will also review the Accounting norms at journal intervals and, if necessary, revise the same. The composition of the ASB is broad- grounded with a view to icing participation of all interest- groups in the standard- setting process. These interest- groups include assiduity, representatives of colorful departments of government and nonsupervisory authorities, fiscal institutions and academic and professional bodies. 8. Account norms In India the Central Government in discussion with the National Committee on Accounting norms( NACAS) has issued the Companies( Accounting norms) 7 - 1 Rules 2006. Under this Rules, Accounting norms( i.e. 1 to 7 and 9 to 29) have been notified In addition, the Ministry of Corporate Affairs has notified confluence of 35 Indian Accounting norms with International Financial Reporting norms( hereafter called IND AS) on February 25, 2011. These are- IND Burro 1, 2, 7, 8, 10, , 12, 16, 17, 18, 19, 20, 21, 23, 24, 27, 28, 29, 31, 32, 33, 34, 36, 37, 38, 39, 40, , 102, 103, 104, 105, 106, 107 and 108. These Accounting norms are yet to

be executed. The following are the Accounting norms issued under Companies( Accounting norms) Rules 2006 Accounting Standard( AS- 1) Disclosure of Accounting Policies Accounting Standard( AS- 2) Valuation of supplies Account Standard( AS- 3) Cash Flow Statement Accounting Standard( AS- 4) Contingencies and Events being after the Balance distance Date Account Standard( AS- 5) Net Profit or Loss for the Period, previous Period particulars and Changes in Accounting programs Accounting Standard( AS- 6) Depreciation Accounting Accounting Standard( AS- 7) Construction Contracts Account Standard( AS- 9) profit Recognition Accounting Standard( AS- 10) Account for Fixed means Accounting Standard( AS- 11) The goods of Changes in Foreign Exchange Rates Accounting Standard( AS- 12) Account for Government subventions Accounting Standard( AS- 12) Account for Investments Accounting Standard( AS- 14) Account for combinations Account Standard( AS- 15) Hand Benefits Account Standard( AS- 16) Borrowing Costs Account Standard( AS- 17) Member Reporting Accounting Standard( AS- 18) Affiliated Party exposures Account Standard( AS- 19) Leases Accounting Standard( AS- 20) Earnings Per Share Account Standard( AS-

Consolidated Financial Statements Account Standard( AS- 22) Account for levies on Income. Accounting Standard( AS- 23) Account for Investments in Associates. Accounting Standard( AS- 24) Discontinuing Operations. - 1 8 Accounting Standard( AS- 25) Interim Financial Reporting. Accounting Standard( AS- 26) Impalpable means. Accounting Standard( AS- 27) fiscal Reporting of Interest in Joint Ventures Accounting Standard( AS- 28) Impairment of means Accounting Standard( AS- 29) vittles, Contingent arrears and Contingent means. A brief discussion of the below Account norms issued under the Companies( Accounting norms) Rules 2006 is given below AS- 1 - Disclosure of Accounting programs This standard deals with the exposure of significant account programs followed in the medication and donation of fiscal statements. The purpose of this standard is to promote better understanding of fiscal statements by establishing the exposure of significant account programs in the fiscal statements and the manner of doing so. Compliance with this standard should go a long way in easing a more meaningful comparison between fiscal statements of different enterprises. The views presented in the statements of an enterprise of its state of affairs and of the profit or loss account can be significantly affected as the account programs followed vary from enterprise to enterprise. All significant account programs espoused in the medication and donation of fiscal statements should be bared. The exposure of the significant account programs as similar should form part of the fiscal statements and the significant account programs should typically be bared in one place. Any change in the account programs which has a material effect in the current period or which is nicely anticipated to have a material effect in after ages should be bared. In the case of a change in counting programs which has a material effect in the current period, the quantum by which any item in the fiscal statements is affected by similar change should also be bared to the extent ascertainable. Where similar quantum isn't ascertainable, wholly or in part, the fact should beindicated.However, viz, If the abecedarian account hypotheticals. going concern, thickness and addendum are followed in fiscal statements, specific exposure isn'trequired.However, the fact should be bared, If a abecedarian account supposition isn't followed. The primary consideration is that the fiscal statements should give a true and fair view of the firm ‘s income and fiscal position. AS- 2 - Valuation of supplies supplies generally constitute the second largest item after fixed means, in the fiscal statements particularly of manufacturing organisations. The value attached to supplies can materially affect the operating results and the fiscal position. still, different base of valuing supplies are used by different businesses and indeed by different undertakings within the same trade or assiduity. The primary issue in account for supplies is the determination of the value at which supplies are carried in the fiscal statements until the affiliated earnings are recognised. 9 - 1 supplies are defined as means( a) held for trade in the ordinary course of business;( b) in the process of product for similar trade; or( c) in the form

Accounting Standards in India: ASB & Companies Act Rules, Lecture notes of Business Finance

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