ASSIGNMENT 8

ACCOUNTING AND FINANCE (MBA 601)

Group 5:

APOORV AGARWAL (19125011)

ARUN GOYAL (19125013)

ITTI SINGH (19125023)

RUBEN JOSEPH (19125031)
VAIBHAV BAJPAI (19125048)
Accounting Framework
An accounting framework is standardized set of rules that is used to measure, acknowledge,
present and reveal the information appearing in an entity’s financial statements. Frameworks also
helps auditors to resolve various problems that may occur even when there may not be any
accounting standards that might be present. The reason for developing an accounting framework
is to resolve various accounting disputes and fundamental principles which need not be repeated
in accounting standards.
The GAAP (Generally Accepted Accounting Principle) is a set of rules that is to be followed by
all the accountants. In India, Institute of Charted Accountants of India (ICAI) under the Ministry
of Corporate Affairs regulates the accounting profession in India. It recommends the accounting
standards that are to followed by the companies in India.

Types of Accounting Frameworks

There are many different accounting frameworks that are followed in different countries. Some
of the different accounting frameworks are mentioned below:
1.International Financial Reporting Standards: The International Financial Reporting
Standards is updated by International Accounting standards Board. IFRS is used in about 110
countries and is one the widely used accounting standard. As per IFRS, the revenue is shown at
the fair value of the money received or receivable. Whereas according to the Indian GAAP, it is
the money charged for profits or services and the rewards received using those resources.
According to the IFRS, a company need to provide only the balance sheet and income statement.
Historical cost principle requires no change in the value of items in the Financial Statements, yet
it is the basis in which value of the items is recorded at the historical cost. Under IFRS, except
for the cash flow statement the other financial statements are prepared on accrual basis.
2.US Generally Accepted Accounting Principles: It is adopted by the US Securities and
exchange commission. Earning per share disclosure is mandatory. Revaluation of assets is not
permitted. Investment in own shares is permitted. R&D expenses are incurred. Under historical
cost principle, most assets are to be recorded on the balance sheet at their historical cost even if
they have significantly increased in value over time. The accrual method of accounting lies in
matching the time period when the transaction is done rather than when the payment is done.
3.Australian Accounting Standards Board: The AASB is responsible for maintaining the
accounting framework in Australia. In Australia, goodwill is not allowed to be amortized but it is
subject to a yearly review for impairment. In Australia, fixed assets that is held for sale is
mentioned separately in the balance sheet. Comparing with India, where R&D expenses are
mentioned in the P&L account but not mentioned in the balance sheet. But in Australia, all
research expenses are treated as proper expenses.
4. Other comprehensive basis of accounting (OCBOA): It is a basis of accounting which is
followed in US other than the generally accepted accounting principles specified by GAAP. It is
permitted only during certain circumstances.
References
1. http://ijcrt.org/papers/IJCRT1704286.pdf
2. https://www.ukessays.com/essays/accounting/the-importance-of-the-conceptual-framework-
for-accounting-accounting-essay.php
3. https://en.wikipedia.org/wiki/International_Financial_Reporting_Standards
4. http://www.differencebetween.net/business/finance-business-2/difference-between-
conceptual-frameworks-and-accounting-standards/
5. https://www.wallstreetmojo.com/ifrs-vs-indian-gaap/
6. https://www.caclubindia.com/experts/difference-between-us-gaap-and-india-gaap-13521.asp
7. https://en.wikipedia.org/wiki/Generally_Accepted_Accounting_Principles_(United_States)