AS 1 Disclosure of Accounting Policies

AS 2 Valuation of Inventories

AS 3 Cash Flow Statements

AS 4 Contingencies and Events Occurring After Balance Sheet Date

AS 5 Net profit or Loss for the period, Prior Period Items and Changes in Accounting Policies

AS 7 Construction Contracts

AS 9 Revenue Recognition

AS 10 Property, Plant and Equipment

AS 11 The Effects of Changes in Foreign Exchange Rates

AS 12 Government Grants

AS 13 Accounting for Investments

AS 14 Accounting for Amalgamations

AS 15 Employee Benefits

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

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

Accounting Standard Board

(ASB): Scope, Role and
Enforcement
ADVERTISEMENTS:

Let us make an in-depth study of the scope, role and

enforcement of Accounting Standards Board.

Scope and Functions of ASB:

(1) Main function of ASB is to formulate accounting standards.

(2) While formulation of standards ASB has to consider applicable

laws, customs, social and business environment.

ADVERTISEMENTS:

(3) ASB has to give due consideration to IAS issued by IASC from
time to time to develop own standards in light of conditions and
practices being followed in India.

(4) ASB has to persuade the accounting professionals and preparers

of financial statements to adopt them.
(5) ASB has to issue guidance notes on accounting standards.

(6) To review all accounting standards from time to time.

Role of ASB in Development and Enforcement of

Standards:

ADVERTISEMENTS:

The following steps are taken by ASB for issue of any

accounting standard in India:

(1) The areas in which accounting standard is needed to be

formulated determined by ASB.

(2) Various study groups are formed by ASB to assist ASB to

consider special subjects. However in forming these groups
provision is made for participation of members of institute and
others.

(3) A discussion is arranged with representation of government

agencies, public sector undertaking, industry and other
organisation.

(4) An exposure draft is prepared and issued for comments of

general public.
(5) A standard draft is finalized by ASB after taking due
consideration of the comments.

(6) The accounting standard is submitted by ASB to the council of

Institute.

(7) The council may decide to modify the exposure draft in

consultation of ASB.

(8) The accounting standard is then issued under the authority of

council of institute.

Enforcement of Standards:

ADVERTISEMENTS:

Indian professional institutes like, ICA1, ICWAI and ICSI are

recognized bodies by the Government of India. Members of these
institutes are generally employed as auditors as well as company
secretaries of companies. While discharging attest functions, it is
the duty of the members of the institute to ensure that concerned
company has followed various accounting standards while
presenting and preparing financial statements. In the case of
deviation, it will be part of their duty to disclose in their reports so
that users of financial statements are aware of such variations.
In the initial years, most of the standards were of recommendatory
nature but with the passage of time have been made mandatory.
The adoption of accounting standards in India over the years, will
have an important effect, with consequential improvement in
quality of presentation of financial statements. The Companies Act
was recently amended by the companies (Amendment) Ordinance
1999, the accounting standards were made mandatory only for the
profession by the ICAI, now with this amendment, the auditors are
required to report if the companies did not comply with the
accounting standards while preparing and presenting financial
statements.

They are also required to report the extent of deviations if any from
standards. It may be noted here that the standards are also
applicable to the non-corporate entities like sole traders,
partnership firms, association of persons etc. U/S 210 A inserted by
the companies ordinance 1999, the Central Government may form
and constitute a National Advisory Committee on accounting
standards to advice the Central Government on the formulation of
accounting policies and standards for adoption by companies under
Companies Act.

The creation of NAC indicates that the ICAI will not be the final
authority to issue the accounting standards but the ultimate power
lies with the Central Government to prescribe the accounting
standards for adoption by companies in consultation with NAC. The
only positive change is there that accounting standards prescribed
U/s 210 A and U/s 211 of the companies Act will now have a
statutory force and companies will have to follow them.

There is a controversy about the application of accounting

standards to non-corporate entities in our country. Many
accounting professionals feel that there is no justification and even
need to apply the complicated ASs to non-corporate sector, which is
at present unorganized and even not having proper set up to cope
with problems arising from application of ASs to them. By keeping
this in mind ICAI has deferred the application to non-corporate
sector for a period of two years.

Slow Progress—In Standard Setting In India:

In comparison to the other developed nations like USA and UK.

India could not do satisfactory progress in standard setting.

Numbers of factors are responsible for slow progress:

(a) Indifferent attitude of ICAI is responsible for slow progress of

standard setting in India. This institute is main professional body
which dominates in the field of accounting developments. This
institute remained engaged in performing its basic activities of
conducting examinations for chartered accountants and preparing
them for conduct of audit function and also remained busy in
formulation of accounting standards. ICAI do emphasized on first
accounting activity and could not devote much attention on second
activity of formulation of accounting standards.

(b) In India standard setting programmes lack confidence of

general public in comparisons to other countries like USA, where
open debate is held on accounting issues. The ICAI being an
autonomous body could not maintain autonomous attitude in the
functioning.

(c) Accounting professionals in India like accountants and auditors

do not like any changes. But accounting being a dynamic discipline
have to have changes even inclined to hold past will be unrealistic.

(d) Indian government not only interferes in matters of business

affairs but also in laws relating to company accounts and financial
reporting. It is justified on the basis of ground that accounting
professions could not have leaders who could lead the discipline in
an effective way.

(e) Accounting research plays an important role in the development

of standards and it has been proved in countries like USA where
accounting researchers are still busy in doing research work in
important areas of contemporary accounting issues. In India, it has
been noticed that not much accounting research has been
conducted. It can be one of the factors responsible for slow-
progress in standard setting in India.
Formulation of Accounting
Standards in India
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Since 1977 after the government passed a statute, the Accounting
Standard Board (ASB) a committee of the ICAI has been responsible
for the formulation of accounting standards in India. Let us take a brief
look at the functioning of the ASB and the procedure behind the
formulation of accounting standards in India.

Accounting Standard Board

ICAI is the highest accounting body in the country. And the ASB is a
committee of the ICAI. But to ensure maximum transparency and
independence, the ASB is a completely independent body.

The ASB formulates all the accounting standards for the Indian
companies. This process is fully transparent, very thorough and
completely independent of any government involvement. While
framing the standards the ASB will try and incorporate the IFRS and its
principles in the Indian standards. While India does not plan to adopt
the IFRS, this process will help the convergence of the two standards.
So the ASB will modify the IFRS to suit the laws, customs and
common usage in the country.

The ASB is composed of various members. There are representatives of

industries like the FICCI and ASSOCHAM. There are also certain
government officials, a few academics, and regulators from various
departments. The idea is to make the ASB as inclusive and
representative as possible.
Procedure for Formulation of Accounting
Standards
Let us take a brief look at the procedure setting process that the ASB
follows

 First, the ASB will identify areas where the formulation of accounting
standards may be needed
 Then the ASB will constitute study groups and panels to discuss and
study the topic at hand. Such panels will prepare a draft of the
standards. The draft normally includes the definition of important
terms, the objective of the standard, its scope, measurement
principles and the representation of said data in the financial
statements.
 The ASB then carries out deliberations of the said draft of the
standard. If necessary changes and revisions are made.
 Then this preliminary draft is circulated to all concerned authorities.
This will generally include the members of the ICAI, and any other
concerned authority like the Department of Company Affairs (DCA),
the SEBI, the CBDT, Standing Conference of Public Enterprises
 (SCPE), Comptroller and Auditor General of India etc. These
members and departments are invited to give their comments.
 Then the ASB arranges meetings with these representatives to
discuss their views and concerns about the draft and its provisions
 The exposure draft is then finalized and presented to the public for
their review and comments
 The comments by the public on the exposure draft will be reviewed.
Then a final draft will be prepared for the review and consideration
of the ICAI
 The Council of the ICAI will then review and consider the final draft
of the standard. If necessary they may suggest a few modifications.
 Finally, the Accounting Standard is issued. In the case of standard for
non-corporate entities, the ICAI will issue the standard. And if the
relevant subject relates to a corporate entity the Central
Government will issue the standard.

Solved Question for You

Q: What are the functions of the Accounting Standard Board?

Ans: Some of the functions of the ASB are as follows,

i. Point out the areas for which Accounting Standards should be

developed
ii. Formulate such standards according to the procedure
iii. Review the accounting standards at regular intervals and revise
them if necessary
iv. Provide interpretation and guidance notes from time to time
 Indian Accounting Standard (abbreviated as Ind-AS) is the Accounting standard adopted by
companies in India and issued under the supervison of Accounting Standards Board (ASB) which
was constituted as a body in the year 1977. ASB is a committee under Institute of Chartered
Accountants of India (ICAI) which consists of representatives from government department,
academicians, other professional bodies viz. ICAI, representatives from ASSOCHAM, CII, FICCI,
etc.
The Ind AS are named and numbered in the same way as the International Financial Reporting
Standards (IFRS). National Advisory Committee on Accounting Standards (NACAS) recommend
these standards to the Ministry of Corporate Affairs (MCA). MCA has to spell out the accounting
standards applicable for companies in India. As on date MCA has notified 41 Ind AS. This shall be
applied to the companies of financial year 2015-16 voluntarily and from 2016-17 on a mandatory
basis.
Based on the international consensus, the regulators will separately notify the date of
implementation of Ind-AS for the banks, insurance companies etc. Standards for the computation of
Tax has been notified as ICDS in February 2015.[1]

Contents

 1History
 2Applicability[2][3][4][5]
o 2.1Mandatory Applicability from Accounting Period beginning on or after 1st April 2017
 3List of Indian Accounting Standards[6]
 4Provisions
 5See also
 6References

History[edit]
India followed accounting standards from Indian Generally Acceptable Accounting Principle (IGAAP)
prior to adoption of the Ind-AS.[2][3]

Applicability[2][3][4][5][edit]
Companies shall follow Ind AS either Voluntarily or Mandatorily. Once a company follows Indian AS,
either mandatorily or voluntarily, it can't revert to old method of Accounting.
=== Mandatory Applicability (1 April 16)

 Every Company with Net worth of not less than 500 crores (5 billion).
Mandatory Applicability from Accounting Period beginning on or
after 1st April 2017[edit]

 Every Listed Company.

 Unlisted Companies with Net worth greater than or equal to Rs. 250 crore (2.5 billion) but less
than Rs. 500 crore (5 billion)(for any of the below mentioned periods).
Net worth shall be checked for the previous four Financial Years (2013-14, 2014-15, 2015-16, and
2016-17)
List of Indian Accounting Standards[6][edit]

Ind As No. Name of Indian Accounting Standard

Ind AS 101 First-time adoption of Ind AS

Ind AS 102 Share Based payments

Ind AS 103 Business Combination

Ind AS 104 Insurance Cont

Ind AS 105 Non-Current Assets Held for Sale and Discontinued Operations

Ind AS 106 Exploration for and Evaluation of Mineral Resources

Ind AS 107 Financial Instruments: Disclosures

Ind AS 108 Operating Segments

Ind AS 109 Financial Instruments

Ind AS 110 Consolidated Financial Statements

Ind AS 111 Joint Arrangements

Ind AS 112 Disclosure of Interests in Other Entities

Ind AS 113 Fair Value Measurement

Ind As No. Name of Indian Accounting Standard

Ind AS 114 Regulatory Deferral Accounts

Ind AS 115 Revenue from Contracts with Customers

Ind AS 1 Presentation of Financial Statements

Ind AS 2 Inventories Accounting

Ind AS 7 & in only AS

Statement of Cash Flows
3

Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Ind AS 10 Events after Reporting Period

Ind AS 11 Construction Contracts

Ind AS 12 Income Taxes

Ind AS 16 Property, Plant and Equipment

Ind AS 17 Leases

Ind AS 18 Revenue Recognition

Ind AS 19 Employee Benefits

Ind As No. Name of Indian Accounting Standard

Accounting for Government Grants and Disclosure of Government

Ind AS 20
Assistance

Ind AS 21 The Effects of Changes in Foreign Exchange Rates

Ind AS 23 Borrowing Costs

Ind AS 24 Related Party Disclosures

Ind AS 27 Separate Financial Statements

Ind AS 28 Investments in Associates and Joint Ventures

Ind AS 29 Financial Reporting in Hyper inflationary Economies

Ind AS 32 Financial Instruments: Presentation

Ind AS 33 Earnings per Share

Ind AS 34 Interim Financial Reporting

Ind AS 36 Impairment of Assets

Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets

Ind AS 38 Intangible Assets

Ind As No. Name of Indian Accounting Standard

Ind AS 40 Investment Property

Ind AS 41 Agriculture

Applicability of IND AS – Indian

Accounting Standards
Updated on Oct 23, 2018 - 04:40:00 PM
The Ministry of Corporate Affairs (MCA), in 2015, had notified the Companies (Indian
Accounting Standards (IND AS)) Rules 2015, which stipulated the adoption and
applicability of IND AS in a phased manner beginning from the Accounting period 2016-
17. The MCA has since issued three Amendment Rules, one each in year 2016, 2017,
and 2018 to amend the 2015 rules.
The IND AS are basically standards that have been harmonised with the IFRS to make
reporting by Indian companies more globally accessible. Since Indian companies have
a far wider global reach now as compared to earlier, the need to converge reporting
standards with international standards was felt, which has led to the introduction of IND
AS.

 Phases of adoption
 Net Worth Calculation
 Voluntary adoption
 SEBI Clarification

Phases of adoption
MCA has notified a phase-wise convergence to IND AS from current accounting
standards. IND AS shall be adopted by specific classes of companies based on their
Net worth and listing status. Let’s see the each of the phases in detail below:

Phase I
Mandatory applicability of IND AS to all companies from 1st April 2016, provided:

 It is a listed or unlisted company

 Its Net worth is greater than or equal to Rs. 500 crore*
*Net worth shall be checked for the previous three Financial Years (2013-14, 2014-15,
and 2015-16).

Phase II
Mandatory applicability of IND AS to all companies from 1st April 2017, provided:

 It is a listed company or is in the process of being listed (as on 31.03.2016)

 Its Net worth is greater than or equal to Rs. 250 crore but less than Rs. 500 crore (for
any of the below mentioned periods).

Net worth shall be checked for the previous four Financial Years (2014-14, 2014-15,
2015-16, and 2016-17)

Phase III
Mandatory applicability of IND AS to all Banks, NBFCs, and Insurance companies from
1st April 2018, whose:

 Net worth is more than or equal to INR 500 crore with effect from 1st April 2018.

IRDA (Insurance Regulatory and Development Authority) of India shall notify the
separate set of IND AS for Banks & Insurance Companies with effect from 1st April
2018. NBFCs include core investment companies, stock brokers, venture capitalists,
etc. Net Worth shall be checked for the past 3 financial years (2015-16, 2016-17, and
2017-18)

Phase IV
All NBFCs whose Net worth is more than or equal to INR 250 crore but less than INR
500 crore shall have IND AS mandatorily applicable to them with effect from 1st April
2019.

Please Note:
If IND AS become applicable to any company, then IND AS shall automatically be
made applicable to all the subsidiaries, holding companies, associated companies, and
joint ventures of that company, irrespective of individual qualification of such
companies.
In case of foreign operations of an Indian Company, the preparation of stand-alone
financial statements may continue with its jurisdictional requirements and need not be
prepared as per the IND AS.
However, these entities will still have to report their IND AS adjusted numbers for their
Indian parent company to prepare consolidated IND AS accounts.
Net Worth Calculation
Net worth will be determined based on the stand-alone accounts of the company as on
31st March 2014, or the first audited period ending after that date. Net Worth is the total
of Paid-up share Capital and all reserves out of profit & securities premium account,
after deducting accumulated losses, deferred expenditure, and miscellaneous
expenditure not written off. Only capital Reserve arising out of Promoters Contribution
and Government Grants received can be included. Reserves created out of revaluation
of assets and written back depreciation cannot be included.

Voluntary adoption
Companies can voluntarily choose to incorporate IND AS in their reports for accounting
periods beginning on or after April 01, 2015. While reporting, such companies must
include a comparative report for the periods ending 31 March 2015 or thereafter, where
IND AS have been incorporated to present a comparative view. However, once a
company has started reporting as per the IND AS, it cannot change to reporting as per
previous laws.

SEBI Clarification
For all the issuer companies whose offer documents are filed with SEBI on or after 1st
April 2016, SEBI has issued a clarification on the applicability of the Indian Accounting
Standards (IND AS) and disclosures to be made in the offer documents. Typically,
SEBI requires issuer companies to disclose financial information for the previous 5
financial years immediately preceding the year of filing of the offer document, while
following uniform accounting policies for each of the financial years. For those issuer
companies filing an offer document these points can be noted:

1. Up to March 31, 2017, all of the financial statements filed by them can be under Indian
GAAP.
2. Between April 1, 2017 and March 31, 2018, disclosures in the previous three financial
years immediately preceding the relevant financial year will have to be made under the
IND AS principles, while disclosures for the remaining two financial years may be done
under Indian GAAP.
3. Between April 1, 2018, and March 31, 2019, disclosures in the previous three financial
years immediately preceding the relevant financial year will have to be made under the
IND AS principles, while disclosures for the remaining two financial years may be done
under Indian GAAP.
4. Between April 1, 2019 and March 31, 2020, disclosures in the previous four financial
years immediately preceding the relevant financial year will have to be made under the
IND AS principles, while disclosures for the remaining one financial year may be done
under Indian GAAP.
5. On or after April 1, 2020, disclosures in all the previous five financial years will have to
be made as per the IND AS principles.
SEBI has also provided discretion to issuer companies to present financial statements
for all five financial years under IND AS on a voluntary basis. This clarification does not
apply to issuer companies making rights issue.
The major standards are listed here below:

Ind AS 101 First-time adoption of Ind AS

Ind AS 102 Share Based payments

Ind AS 103 Business Combination

Ind AS 104 Insurance Contracts

Ind AS 105 Non-Current Assets Held for Sale and Discontinued Operations

Ind AS 106 Exploration for and Evaluation of Mineral Resources

Ind AS 107 Financial Instruments: Disclosures

Ind AS 108 Operating Segments

Ind AS 109 Financial Instruments

Ind AS 110 Consolidated Financial Statements

Ind AS 111 Joint Arrangements

Ind AS 112 Disclosure of Interests in Other Entities

Ind AS 113 Fair Value Measurement

Ind AS 114 Regulatory Deferral Accounts

Ind AS 115 Revenue from Contracts with Customers

Ind AS 1 Presentation of Financial Statements

Ind AS 2 Inventories Accounting

Ind AS 7 Statement of Cash Flows

Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Ind AS 10 Events after Reporting Period

Ind AS 11 Construction Contracts

Ind AS 12 Income Taxes

Ind AS 16 Property, Plant and Equipment

Ind AS 17 Leases

Ind AS 18 Revenue

Ind AS 19 Employee Benefits

Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance

Ind AS 21 The Effects of Changes in Foreign Exchange Rates

Ind AS 23 Borrowing Costs

Ind AS 24 Related Party Disclosures

Ind AS 27 Separate Financial Statements

Ind AS 28 Investments in Associates and Joint Ventures

Ind AS 29 Financial Reporting in Hyperinflationary Economies

Ind AS 32 Financial Instruments: Presentation

Ind AS 33 Earnings per Share

Ind AS 34 Interim Financial Reporting

Ind AS 36 Impairment of Assets

Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets

Ind AS 38 Intangible Assets

Ind AS 40 Investment Property

Ind AS 41 Agriculture