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Chapter 1
INTRODUCTION TO ACCOUNTING
STANDARD
CHAPTER DESIGN
ACCOUNTING STANDARDS :
1. INTRODUCTION
2. WHY ACCOUTING STANDARD
3. WHAT ARE ACCOUTING STANDARD
4. ACCOUTING STANDARD DEALS WITH
5. ACCOUTING STANDARD SETTING PROCESS
6. ACCOUTING STANDARD BENEFITS
7. ACCOUTING STANDARD DISADVANTAGES
INDIAN ACCOUNTING STANDARDS :
8. INTRODUCTION
9. WHY INDIAN ACCOUNTING STANDARD (IND
AS)
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10. WHAT ARE INDIAN ACCOUNTING STANDARD
(IND AS)
11. INTERNATIONAL FINANCIAL REPORTING
STANDARD
12. CARVE IN CARVE OUT
13. INDIAN ACCOUTING STANDARD BENEFITS
14. GOVERNMENT OF INDIA’S COMMITMENT TO
IND AS
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ACCOUNING STANDARDS
1. INTRODUCTION :
Why ?
Limitations
of
What ?
Accounting
Standards
Accounting
Standards
Benefits of
AS deals
Accounting
with
Standards
Accounting
Standard
Setting
Process
2. WHY ACCOUNTING STANDARDS :
Accounting as a “language of business” communicates the
financial results of the enterprise to various stakeholders by means
of financial statements.
If the financial accounting process is not properly regulated, there
is possibility of financial statements being misleading, tendentious
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and providing a distorted picture of the business rather than the
true.
To ensure transparency, consistency, comparability, adequacy and
reliability of financial reporting, it is essential to standardize the
accounting principles and policies.
Accounting Standards (Ass) provide framework and standard
accounting polices for treatment of transactions and events so that
the financial statements of different enterprise become
comparable.
3. WHAT IS ACCOUNTING STANDARDS :
Accounting Standards (Ass) provide framework and standard
accounting polices for treatment of transactions and events so that
the financial statements of different enterprise become
comparable.
Accounting Standards are written policy documents issued by the
expert accounting body or by government or other regulatory
body, to harmonies the accounting process to that financial
statement presents true and fair picture of business.
4. AS DEALS WITH :
R • Recognition
M • Measurement
P • Presentation
D • Disclosure
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5. AS SETTING PROCESS :
ASB Of ICAI Set Up In 1977
Area
Issue the Study
standard Group
Modify Draft
Comments Comments
and views and Views
Expsosure
Draft
6. AS BENEFITS :
S - Standardization
D - Disclosure
C - Comparability
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7. AS DISADVANTAGES :
D - Difficulty in making choice
R - Restrictions
INDIAN ACCOUNING STANDARDS
8. INTRODUCTION :
Why ?
GOI
Commitment What ?
to IND AS
IND AS
Benefits of
International
Accounting
Standards
Standards
Carve in
Carve out
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9. WHY INDIAN ACCOUNTING STANDARDS (IND AS) :
In the present era of globalization and liberalization, the world has
become an economic village.
More and more Indian companies are being listed on overseas
stock exchanges. The use of different accounting frameworks in
different countries, which require inconsistent treatment and
presentation of the same underlying economic transactions,
creates confusion for users of financial statements. This confusion
leads to inefficiency in capital markets across the world. Therefore,
increasing complexity of business transactions and globalization of
capital markets call for a single set of high quality accounting
standards.
Thus, the case for a single set of globally accepted accounting
standards has prompted many countries to pursue convergence of
national accounting standards with IFRS.
10. WHAT ARE INDIAN ACCOUNTING STANDARDS (IND AS) :
Indian Accounting Standards (Ind-AS) are the International
Financial Reporting Standards (IFRS) converged standards issued
by the 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).
ASB is a committee under Institute of Chartered Accountants of
India (ICAI) which consists of representatives from government
department, academicians, other professional bodies viz. icsi, icai,
representatives from ASSOCHAM, CII, FICCI, etc.
The Ind AS are named and numbered in the same way as the
corresponding International Financial Reporting Standards (IFRS).
11. INTERNATIONAL FINANCIAL REPORTING STANDARDS :
IFRS – Collectively includes
International Accounting Standard Committee (IASC) – formed in
1973 issued
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International Accounting Standards (IAS)
Standard interpretation committee (SIC)
International Accounting Standard Board (IASB) – from 2000 issued
International Financial Reporting Standards (IFRS)
International Financial Reporting Interpretation Committee
(IFRIC)
In short IFRS means IAS/SIC/IFRS/IFRIC
12. CARVE IN CARVE OUT :
The Government of India in consultation with the ICAI decided to
converge and not to adopt IFRS issued by the IASB. The decision of
convergence rather than adoption was taken after the detailed
analysis of IFRS requirements and extensive discussion with various
stakeholders.
Accordingly, while formulating IFRS converged Indian Accounting
Standards (Ind AS), efforts have been made to keep these
Standards, as far as possible, in line with the corresponding IAS/IFRS
and departures have been made where considered absolutely
essential.
13. INDIAN ACCOUNTING STANDARDS BENEFITS :
The need for Convergence
S - Standardization
I - International Capital Flow
R - Benefits to regulators
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14. GOVERNMENT OF INDIA’S COMMITMENT TO IND AS :
Road Map to Implementation of IND AS
PHASE 1 PHASE 2 PHASE 3
• VOLUNTARY • MANDATORY • MANDATORY
• 1/4/2015 • 1/4/2016 • 1/4/2017
PHASE 1 1st April 2015 or thereafter: Voluntary Basis for all
companies
PHASE 2 1st April 2016: Mandatory Basis
A Companies listed / in process of listing on
Stock Exchanges in India or Outside India
having net worth =/> 500 crore
B Unlisted Companies having net worth =/> 500
crore
C Parent, Subsidiary, Associate and Joint
venture of above
PHASE 3 1st April 2017: Mandatory Basis
A All companies which are listed/or in process of
listing inside or outside India on Stock
Exchanges not covered in Phase I (other than
companies listed on SME Exchanges)
B Unlisted companies having net worth =/> 250
crore
C Parent, Subsidiary, Associate and Joint
venture of above
Thanks ….
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