Accounting Standards

• An accounting standard is a selected set of accounting policies or broad

guidelines regarding the principles and methods to be chosen for the purposes of
Financial Reporting

• The main objective of accounting standard is to harmonize the diverse accounting

policies and practices
Fundamental Accounting Assumptions

As per Accounting Standard 1 issued by ICAI:

• Going Concern Concept
• Consistency Concept
• Accrual Concept
Blockchain

Triple Entry Accounting System

 Importance of Accounting Standards

• The adoption and application of accounting standards ensures uniformity,

comparability and qualitative improvement in the preparation and presentation
of financial statements.

• The users of the financial statements need an assurance that the entities
preparing their financial statements follow the accepted standards while
presenting their financial information in the financial statements.
 Accounting Standards Board of India

• The Institute of Chartered Accountants of India, recognizing the need to

harmonize the diverse accounting policies and practices at present in use in India,
constituted Accounting Standard Board (ASB) on 21 april, 1977.
• The main function of ASB is to formulate accounting standards so that such
standards may be established by the council of the Institutive in India.
• The Institute is one of the members of the IASC and agreed to support the
objectives IASC.
• The council of Institute of Chartered Accountants of India has so far issued 32
accounting standards.
AS No. Title Recommendatory or Mandatory from
mandatory

AS-1 Disclosure of accounting Policies Mandatory 1.4.1991

AS-2 Valuation of Inventories Mandatory 1.4.1999

AS-3 Cash Flow Statements Mandatory 1.4.2001
AS-4 Contingencies and Events Mandatory 1.4.1995
Occurring after the Balance Sheet
date
AS-5 Prior Period and Extraordinary Mandatory 1.4.1996
items and changes in accounting
policies
AS-6 Depreciation Accounting Mandatory 1.4.1995
AS-7 Accounting for Construction Mandatory 1.4.2003
Contract
AS-8 Accounting for R&D (withdrawn Mandatory 1.4.1991
from 1.4.2003)
AS-9 Revenue Recognition Mandatory 1.4.1991
AS No. Title Recommendatory or Mandatory from
mandatory

AS-10 Accounting for Fixed Assets Mandatory 1.4.1991

AS-11 Accounting for the effect of Mandatory 1.4.2004
changes in Foreign Exchange rates

AS-12 Accounting for Govt Grants Mandatory 1.4.1995

AS-13 Accounting for Investments Mandatory 1.4.1995
AS-14 Accounting for Amalgamation Mandatory 1.4.1994
AS-15 Accounting for Employee benefits Mandatory 7.12.2006

AS-16 Borrowing cost Mandatory 1.4.2000

AS-17 Segment reporting Mandatory 1.4.2001
AS-18 Related party disclosure Mandatory 1.4.2001
AS-19 Leases Mandatory 1.4.2001
AS No. Title Recommendatory or Mandatory from
mandatory

AS-20 Earning per share Mandatory 1.4.2001

AS-21 Consolidated Financial Statement Mandatory 1.4.2001

AS-22 Accounting for taxes on Income Mandatory 1.4.2001

AS-23 Accounting for investments in Mandatory 1.4.2002

associates
AS-24 Discontinuing operations Mandatory 1.4.2004
AS-25 Interim financial reporting Mandatory 1.4.2002
AS-26 Intangible assets Mandatory 1.4.2003
AS-27 Financial reporting of interest in Mandatory 1.4.2002
joint venture
AS-28 Impairment of Assets Mandatory 1.4.2004
AS No. Title Recommendatory or Mandatory from
mandatory

AS-29 Provisions, Contingent Liabilities Mandatory 1.4.2004

and Contingent Assets

AS-30 Financial Instruments: Recommendatory 1.4.2009

Recognition & Measurement
AS-31 Financial Instruments: Recommendatory 1.4.2009
Presentation
AS-32 Financial Instruments: Disclosures Recommendatory 1.4.2009
 International Financial Reporting Standards- IFRS

• Developed by International Accounting Standards Board

• Set of high quality, understandable and enforceable global accounting standards

• Are Principle-based standards and have a distinct advantage that the transactions can not be
manipulated easily
Objectives of IFRS

• To establish a universal language for the companies to prepare

the accounting statements.
• To establish accounting rules to make it easier for the
stakeholders to interpret the financial statements, irrespective
of the business location.
• Make the accounting statements credible and transparent.
• To assist companies appropriately categorize and report
financial data.
• It makes international comparisons and analysis an easy task.
Convergence with IFRS- International Financial Reporting Standards

• India in process to converge with IFRS

• 40 Indian Accounting Standards have been notified
• Phase 1- starting 1st April 2016
Companies with net worth of 500 crores or more- whether
Listed or Unlisted. Their subsidiaries, joint ventures and
associated companies.

Phase 2- starting 1st April 2017

All listed companies or in the process of listing
Unlisted companies with net worth of 250 crores or more

Exemptions-
Companies listed in SME exchanges
Insurance/Banking/NBFC companies
Benefits of Convergence

• Same language
• Cross border investments leading to economic growth
• Comparability of financial statements of any two companies
anywhere in the world
• Globalisation of economy and world trade
• Growth opportunities for Indian companies for- access to
world capital, global market for products
• MNCs in India- Ease and standardisation in accounting and
reporting. Can lead to more Mergers and Acquisitions
Ind AS

• IND AS stands for Indian Accounting standards and are

converged standards for International Financial Reporting
standards (IFRS). In simple terms, Indian accounting standards
came into existence to meet the requirements of IFRS.
• Indian Accounting Standards (IND AS) were issued by Central
Government of India under the supervision and control of
Accounting Standards Board (ASB) of ICAI and in consultation
with National Advisory Committee on Accounting Standards
(NACAS).
• Currently there are 40 Ind AS issued by ICAI
What is meant by Carve outs/ins in IND AS?

• As IND AS are converged standards for IFRS i.e. IFRS are not
adopted as it is. Certain changes have been made in IFRS
considering the economic environment of the country. These
differences are due to differences in application of accounting
principles and practices and economic conditions prevailing in
India. These differences which are in deviation to the
accounting principles stated in IFRS are commonly known as
‘Carve- Outs’.
• A carve out essentially means that certain requirements of an
accounting standard under IFRS are not be adopted
• There is certain additional note or guidance given in IND AS
which is over and above to what is given in IFRS. This is termed
as ‘Carve-in’.