Kishichand Chellaram College

Bachelor in Banking and Insurance

Subject: Financial Accounts

Topic : Procedure of listing accounting

standards and list out some standards.

IntroductionWhat is accouting standards?

The term standard denotes a discipline, which provides both guidelines and yardsticks for evaluation.

Accounting Standards are the statements of code of practice of the regulatory accounting bodies that are to be observed in the preparation and presentation of financial statements.

As guidelines, accounting standard provides uniform practices and common techniques of accounting. As a general rule, accounting standards are applicable to all corporate enterprises.

The Institute of Chartered Accountant of India (ICAI) constituted the Accounting Standards Board (ASB) in April, 1977 for developing accounting standards

ASB is entrusted with the responsibility of formulating standards on significant accounting matters keeping in view the international developments, and legal requirements in India. The main function of the ASB is to identify areas in which uniformity in standards is required

PROCEDURE FOR ISSUING AN ACCOUNTING STANDARD

1.Determine the broad areas in which Accounting Standards need to be formulated and the priority in regard to the selection thereof.

2.. For the preparation of the Accounting Standards, the CASLB will be assisted by Study Groups constituted to consider specific subjects.

3. The draft of the proposed standard will normally include thE following:a. Objective of the Standard,b. Scope of the Standard,c. Definition of the terms used in the Standard,d. Recognition and measurement principles, wherever applicable,e. Deviations, if any,

The ASB will circulate the draft of the Accounting Standard/Accounting Standards Interpretation for Local Bodies to the Council members of the ICAI and the following specified bodies for their comments:

The ASB will hold a meeting with the representatives of the selected specified bodies to ascertain their views on the draft of the proposed Accounting Standard/Accounting Standards

On the basis of comments received and discussion with the representatives of specified bodies, the ASB will finalise the Exposure Draft of the proposed Accounting Standard.

The Council of the ICAI will consider the final draft of the proposed Standard/Interpretation, and if found necessary, modify the same in consultation with the ASb.

List Of Accounting Standards

Till date, the IASC has brought out 40 accounting standards.Of the 41 IASs issued so far, 29 are at present in force, the remaining standards have been withdrawn. Apart from this, 8 IFRSs have also been issued by the IASB. Corresponding to the IASs/IFRSs, so far, 30 Indian Accounting Standards on the following subjects have been issued:.

Valuation of InventoriesAS-2 :Valuation of

Inventories (June 1981). This standard deals with the principles of

valuing inventories for the financial statements.

Disclosure of Accounting Policies

AS-1 : DISCLOSURE OF ACCOUNTING POLICIES (JANUARY 1979).

THIS STANDARD DEALS WITH THE DISCLOSURE OF

SIGNIFICANT ACCOUNTING POLICIES IN THE

FINANCIAL STATEMENTS.

Cash Flow Statements

AS-3 :(Revised) Cash flow statement (June 1981, Revised in March 1997). This standard deals with the financial statement which summaries for a given period the sources and applications of an enterprise.

Contingencies and Events Occurring After the Balance Sheet Dat

AS-4 : Contingencies and events occurring after the Balance Sheet date (November 1982, Revised in April, 1995) This standard deals with the treatment of contingencies and events occurring after the balance sheet date.

Net Profit or Loss for the Period, Prior Period Items and Changes in

Accounting

AS-5 : Net profit or loss for the period, prior period (period before the date of balance sheet) items and changes in accounting policies (November 1982, Revised in February 1997). This standard deals with the treatment in financial statement of prior period and extraordinary items and changes in

accounting policies.

Depreciation Accounting

AS-6 : Depreciation Accounting (November 1982). This standard applies to all depreciable assets. But this standard does not apply to assets in the category of forests, plantations and similar natural resources and wasting assets.

Construction Contracts

AS-7 : Accounting for construction contracts (December 1983, revised in April 2003). This standard deals with accounting for construction contracts in the financial statements of contractors.

Accounting for Research and Development

AS-8 : Accounting for Research and Development (January 1985). This standard deals with the treatment of costs of research and development in financial statements.

Revenue Recognition

AS-9 Revenue Recognition (November 1985). This standard deals with the bases for recognition of revenue in the statement of profit and loss of an enterprise.

AS-10: Accounting for fixed assets (November 1991). This standard deals with recognition of fixed assets grouped into various categories, such as land, building, plant and machinery, vehicles, furniture and gifts, goodwill, patents, trading and designs.

AS-11 :Accounting for the effects of change in foreign exchange Rates.(August 1991 and Revised in 1993). This standard deals with the issues relating to accounting for effect of change in foreign exchange rates.

AS-12 :Accounting for Government grants (April 1994). This standard deals with the accounting for government grants.

AS-13 :Accounting for investments (September 1994). This standard deals with accounting aspect concerning investments in the financial statements. These include classification, determination of cost for initial recognition, disposal and re-classification of investment.

AS-14 :Accounting for amalgamation (October 1994). This standard deals with accounting treatment of any resultant goodwill or reserves in amalgamation of companies.

AS-15 :Accounting for retirement Benefits in the financial statements of employers (January 1995). This standard deals with accounting for retirement benefits in the financial statements of employers.

AS-16 :Borrowing Costs (April 2000). This standard deals with the uses involved relating to capitalization of interest on borrowing for purchase of fixed assets.

AS-17 :Segment reporting (October 2000). This standard applies to companies which have an annual turnover of Rs 50 crores or more. These companies have to present financial statements and consolidated financial statements.

AS-18 :Related party disclosures (October 2000 revised 1st July 2003).This standard requires certain disclosure which must be made fortransactions between the enterprise and related parties.

AS-19: Leases (January 2001). This standard deals with the accounting treatment of transactions related to lease agreements.

AS-20 :Earning per share (April 2001). This standard deals with the presentation and computation of earning per share (EPS).

Compliance with Accounting Standards

Accounting Standards

issued by the ICAI have legal

recognition through the companies Act,1956,

whereby every company is required to comply with

the accounting standards and the statutory auditors of

every company are required to report whether the accounting standards have been complied

or not.

The companies act,1999 has inserted new sub- sections 3A, 3B and 3C to section

211,with a view to ensure that the financial statements are prepared in

accordance with the accounting standards. The new sub-sections as

inserted are reproduced below:Section 211 (3A): Every profit and loss account and balance sheet of the company shall comply with the accounting standards.Section 211 (3B): Where the profit and loss account and the balance sheet of the company do not comply with the accounting standards.Section 211 (3C): Here the accounting standards specified by the institute of Chartered Accountants of India shall be deemed to be the Accounting Standards until the accounting standards are prescribed by the central government

The basic purpose of listing out accounting standards is to facilitate the provision of financial information about entities to enable investors, analysts, creditors and the entities themselves to make informed decisions about the allocation of resources. Clearly, while accounting standards assist preparers of financial statements by providing a framework within which to construct the statements, their prime importance is to assist users of the statements to make meaningful assessments about the financial position of an entity. Effective financial reporting, which is essential to investor confidence, can only be achieved if it is underpinned by relevant and well designed accounting standards. Accounting standards facilitate both the efficient day-to-day operations of individual business entities and contribute to the efficient operation of capital markets.

CONCLUSIONS

Accounting standards that result in the provision of accurate and comparable information about the true financial performance and position of entities promote investor confidence and market integrity, thereby ultimately reducing the costs of capital throughout the economy. Public confidence in the integrity of the financial reporting framework is central to maintaining and expanding a sophisticated domestic capital market.

Project made by:

Isha Doshi 12Hiral Oza 32Shalu 62 Krutik 2Sarosh 52Ruchita 42Sonal 22Priyank 39