02222

2022
ASSIGNMENT
FINANCIAL ACCOUNTING

NAME : TUSHAR GUPTA

COURSE : BCOM PROGRAMME
ROLL NO : 1194
SUBMITTED TO : ASHWANI
KUMAR

ACCOUNTING
STANDARD
Publicly traded companies typically are subject to rigorous
standards. Small and midsized businesses often follow more
simplified standards, plus any specific disclosures required by
their specific lenders and shareholders. Some firms operate on
the cash method of accounting which can often be simple and
straight forward. Larger firms most often operate on an accrual
basis. Accrual basis is one of the fundamental accounting
assumptions and if it is followed by the company while
preparing the Financial statements then no further disclosure is
required. Accounting standards prescribe in considerable
detail what accruals must be made, how the financial
statements are to be presented, and what additional
disclosures are required.
Some important elements that accounting standards cover
include: identifying the exact entity which is reporting,
discussing any "going concern" questions, specifying monetary
units, and reporting time frames
These are written policy documents issued by an expert accounting body ,
or by govt.,or other regulatory body, covering the following aspects of
accounting transactions in financial statements
 Recognition of transactions and events in the financial statements .
 Measurements of these transactions and events.
 Presentations of these transactions and event in the financial
statements ,in a meaningful and understandable manner.
 Disclosure requirement in financial statement.
The essence of the accounting standards is that they provide specific
guidelines as to how the various items which go to make up the
financial statements should be dealt with in accounts and disclosed
in the annual reports relating to net income and financial position.
For example, accounting standard may define the term depreciation
and prescribe a definite method of charging depreciation in respect
of various items of fixed assets with minor modifications in respect of
special assets. In this way, the accounting standard would reduce the
various options or methods of recording certain business
transactions so that financial statements head become more
meaningful and comparable under various heads . Accounting standards
may also be termed as codified forms of generally accepted accounting
principles. Accounting standards may also be defined as written policy
documents issued by expert accounting body (e.g., Institute of Chartered
Accountants of India), or by Government (e.g., the Companies Act, Income
Tax Act) or its regulatory body (e.g., Securities and Exchange Board of India
popularly known as SEBI) covering such aspects as recognition of events,
measurement, presentation and disclosure of accounting transactions and
events in the financial statements, namely: Balance Sheet and Profit and Loss
Account.

OBJECTIVE
 To promote the dissemination of timely and useful financial
information to all stakeholders and users.
 To provide a set of standard accounting policy,valuation norms and
disclosure requirement.
 To improve the quality of financial reporting,by promoting
comparability,consistency and transparency.
 To ensure disclosure of accounting principles and treatment,where
informationis not otherwise statutorily required to be disclosed.

DEMERITS
  In some cases, alternative solution to specific accounting problem may
have been valid supported argument,choice of one become difficult.
 Standard may be applied in a rigid manner,focussing more on form than
substance.
 Standard cannot override the statue,and should be framed within the
framework of the law.

PROCEDURE OF ISSUING OF ACCOUNTING

STANDARD
 Determine the need for accounting standard;
 Constitute the study group, which include nominee & representative of
several department;
 Drafting the standard, it means study group make a draft or proposed
standard containing:
 (a) Objective & scope
 (b) Definition of term used
 (c) Recognition & measurement principle
 (d) Presentation & disclosure
 • Analysing the draft: ASB will analyse the draft. If any revision is
required, it refers to the same study group
 Circulating Draft
 Holding discussion & finalising the exposure draft.
 Circulating the exposure draft
 Finalising the exposure draft
 Modifying & issuing the accounting standard

LIMITATIONS
The notable limitations of accounting standards are their inflexibility, time-
consuming process to create them, the difficulty of choosing between
alternative treatments and their restrictive scope.[2] Accounting standards
were largely written in the early 21st century. Massive accounting irregularities
at large firms such as Worldcom and Enron illustrate that, despite all these
efforts, widespread fraud can still occur, and even be missed by the outside
auditors.
 INTERNATIONAL FINANCIAL
REPORTING SYSTEM ( IFRS )
 Undoubtedly, globalisation has changed the accounting world.
Globalisation has brought free pricing, volume trading, listing in
international stock exchanges and mutual funds.
 As a result, our accounting system has to become truly global in
character since there is an urgent need to communicate across the
borders. Therefor, financial statements produced in one country are
used in other countries. This development resulted in the formation of
International Accounting Standards .
 IASB is an independent privately funded standards body based in
London. Since, 2001, the IASB was expected to create a set of principles,
guidelines, financial reporting standards that may be used globally
throughout the world's capital market. IASB proposed some guidelines
on topics for which there was no clear cut International Accounting
Standards (IAS). These proposals are known as IFRS.
 IFRS refers to the pronouncements made by IASB as distinct from IAS to
achieve standardisation in financial reporting. IFRS are a principle based
framework and not rule based so that there is no language gap and
barrier.The basic idea behind the IFRS is to standardise the diverse
accounting policies and practices with a view to make financial
statements globally comparable and reliable.oard (IASB).

NEED FOR IFRS

 As a result of increasing globalisation, there is increasing cross-border
flow of goods, services, capital and technology and the role of
multinational corporations in increasing.
 .MNCs operate in different countries through their branches and
subsidiaries. Besides increasing in global trade there is globalisation
of capital & markets
  A company in one country is borrowing in the capital market of
another country. As a result of this, financial statements produced in
one country are used in other countries more & more frequently.
 Hence, it is necessary that financial statement of a company have
worldwide acceptance and observance. The financial statement of a
company operating in one country should be comparable with
financial statements of same type of company operating in another
country.
 Hence, there is a need of a set of uniform and consistent accounting
norms to ensure transparency and comparability in financial
statement across the globe.

BENEFIT OF IFRS
1. GROWTH IN INTERNATIONAL BUSINESS
IFRS will facilitate enormous expansion in world trade and
international investment. IFRS will make account the reports as will
ensure the reliability and comparability of financial statements by
meeting the needs of international users.
2. INVESTORS
Investors would like to direct their investment to the most efficient
and productive companies globally. With the use of IFRS, it will be
convenient for investor to assess the relative merits of alternative
investment opportunities by making comparison of the financial
performance of companies in different countries.
3. MULTINATIONAL COMPANIES
(a) MNCs would benefit from IFRS as under:
Consolidation of overseas subsidiaries would be easier due to IFRS
since financial statements from all around the world would be
prepared on the same basis.
(b) The adoption of IFRS will help the MNCs to raise funds globally.
For this reason, the World Federation of Stock Exchange has
supported the acceptance of IFRS.
(c) The task of preparing comparable internal information for the
appraisal of the performance of subsidiaries in different countries
would be made much easier. Management control would be easy. The
appraisal of foreign country for potential acquisition would also be
facilitated.
4. INTERNATIONAL AUDIT FIRMS
The adoption of IFRS is in interest of international audit firm as it
would facilitate sale of their services in different parts of the world.
5. DEVELOPING COUNTRIES
Many countries do not have their domestic accounting standards.
IFRS would enable them to adopt readymade system without
spending any time, money or efforts. The adoption of IFRS would
promote foreign investor to invest in developing countries.
Developing countries can attract more foreign capital at lower cost.

IFRS IN INDIA
Adoption of IFRS has become a vital issue of discussion and debate in the
different country. Due to the variation in different country's GAAP of an
individual country, a threat is always sustain on the harmonization of
accounting standards. IFRS is one of the best financial reporting systems, which
does not include any country with variation of accounting policies. Now a
single set of financial reporting is final statement to present across the world at a
reduced cost and more reliable,transparent and fair reporting of an entity. still
These benefits are attracting each country to set mandatory for adopting IFRS in
their country. India has also mandate the IFRS for financial reporting statement
from 1st April 2011 but still India have been not succeeded to resolve its issues
relating to conversion with IFRS such as taxation. After enactment of
Companies Act 2013 the ministry of corporate affairs has focus to implement
IFRS.

Phase I 1st April 2016: Mandatory Basis

(a) Companies listed/in process of listing on Stock Exchanges in India or
Outside India having net worth > INR 5 Billion.
(b) Unlisted Companies having net worth > INR 5 Billion

(c) Parent, Subsidiary, Associate and Joint Venture of above.

Phase II 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 INR 5 Billion > INR 2.5 Billion
(c) Parent, Subsidiary, Associate and Joint Venture of Above
 Companies listed on SME exchange not required to apply Ind AS.
 Once Ind ASs are applicable, an entity shall be required to follow the Ind
AS for all the subsequent financial statements.
 Companies not covered by the above roadmap shall continue to apply
existing but the professionals are still having difference on how to get fair
value of assets and liabilities.
Therefore India needs to develop its conference regarding to IFRS convergence.
Also need to develop some training programs for IFRS policies. For the purpose
of successful conversion of IFRS with Indian Corporate, have efficient
professionals to operate in this field. Apart from this, IFRS require the fair
market value applications in financial reporting this may create significant
differences in financial Information currently presented in financial reports.

IFRS ADOPTION PROCEDURE IN INDIA.

To rationalize accounting practices in the country, the Indian government in
1949, established Institute of Chartered Accountants of India by passing ICAI
Act, 1949. Accounting Standard Board was Constituted by ICAI in 1977 in
order to create harmony among the diversified accounting policies and Practices
in India. Three steps process was laid down by the accounting professionals in
India which are Summarized as follows:
STEP 1- IFRS Impact Assessment
This is the first step. In this step the firm will assess the impact of IFRS
adoption on Accounting and Reporting issues,on procedures and systems, and
on core business of the entities. Then the firm will find the key conversion dates
according to IFRS training plan has laid down. As and when the training plan is
in place, the firm will have to identify the important Financial Reporting
Standards which will apply to the firm and also the variations among the present
financial reporting standards being followed by the firm and IFRS both.
STEP 2 - Preparations for IFRS Implementation
This is the second step of the process, which will carry out such activities
required for IFRS implementation process.Then the firm will reform the internal
reporting systems and processes. IFRS first deals with the adoption and
implementation of first time adoption process.
STEP 3- Implementation
This is the final step of the process which deals with the actual implementation
of IFRS. The initial phase of this step is to prepare an opening Balance Sheet at
the date of transition to IFRS. To understand the actual impact of the transition
from the Indian Accounting Standards to IFRS is to be developed. This will
follow the full application of IFRS as and when it is required.

PROBLEMS AND CHALLENGES.

IFRS are formulated by International Accounting Standard Board. However, the
responsibility of convergence with IFRS vests with local government and
accounting and regulatory bodies, such as the ICAI in India. Thus ICAI need to
invest in infrastructure to ensure compliance with IFRS. India has several
constraints and practical challenges to adoption and compliance with IFRS. So
there is a need to change some laws and regulations governing financial
accounting and reporting in India. Therefore there are several challenges that
will be faced on the way of IFRS convergence.
These are:
1. DIFFERENCE IN GAAP & IFRS: Adoption of IFRS means that the entire
set of financial statements will be required to undergo a drastic change. The
differences are wide and very deep routed. It would be a challenge to bring
about awareness of IFRS and its impact among the users of financial statements.
2. TRAINING & EDUCATION: Lack of training facilities and academic
courses on IFRS will also pose challenge in India. There is a need to impart
education and training on IFRS and its application.
3. LEGAL CONSIDERATION: Currently, the reporting requirements are
governed by various regulators in India and their provisions override other laws.
IFRS does not recognize such overriding laws. The regulatory and legal
requirements in India will pose a challenge unless the same is been addressed
by respective regulatory.
4. TAXATION EFFECT: IFRS convergence would affect most of the items in
the financial statements and consequently the tax liabilities would also undergo
a change. Thus the taxation laws should address the treatment of tax liabilities
arising on convergence from Indian GAAP to IFRS.
5. FAIR VALUE MEASUREMENT:IFRS uses fair value as a measurement
base for valuing most of the items of financial statements. The use of fair value
accounting can bring a lot of instability and prejudice to the financial
statements. It also involves a lot of hardwork in arriving at the fair value and
valuation experts have to be used.

INDIAN
ACCOUNTING
STANDARD
The Indian Accounting Standards (Ind AS), as notified under section
133 of the Companies Act 2013, have been formulated keeping the
Indian economic & legal environment in view and with a view to
converge with IFRS Standards, as issued by and copyright of which is
held by the IFRS Foundation.
Meaning of Ind AS
 Ind AS are converged IFRSs issued by the GOI under the
supervision & control of ASB of ICAI and in consultation with
National Financial Reporting Authotiry
 NFRA recommend these standards to MCA.
 MCA has to spell out the AS applicable
  For companies in India.
 Ind AS & IFRSs are numbered in same way.

NEED OF INDIAN AS
 Each country has its own set of rules & regulations for
accounting & financial reporting.
 When an enterprise decide to raise funds from foreign market /
investors, the rules & regulations of investor's country will apply
and this in turn will require that the enterprise is in a position to
understand the difference between the rules governed by foreign
country as compared to own country.
 Therefore, translation & re-instatements are of utmost
importance in a world that in rapidly globalising.
 Internationally, the investors & financial analysis prefer to
compare financial statements based on similar accounting
standards & this has led the growing support for an
internationally accepted set of accounting standards.
 •The harmonisation of financial reporting all over the world will
definitely help to raise faith & confidence of investors, specially
for making their decisions & asses their risks.
 In Indian context, it was also not possible to adopt globally
accepted accounting standards, i.e., IFRSs in its original form
due
 to deviations in various factors like economic environment, legal
requirements, political environment, etc.
 Due to deviations in various factors global standards have been
accepted in India but after making some modifications as per the
requirements of economic conditions & legal positions (Tax
Laws).
APPLICABILITY OF IND-AS
 1.4.2016,7 Companies whose securities listed or in the process
of listing & 500 cr or more net worth.
OR
 Net worth exceeding 500 c
 Holding, Subsidiary, Joint Venture, Associate of above
NOTE
 Once Ind AS has followef than it shall be irrevocable.
 Ind AS,does not apply on banks ,Insurance and Financial
Institution as it is not company.
 Ind AS are converged IFRSs issued by the GOI under the
supervision & control of ASB of ICAI and in consultation
with National Financial Reporting Authotiry (NFRA).
 NFRA recommend these standards to MCA.
 MCA has to spell out the AS applicable for companies in
India.
 Ind AS & IFRSs are numbered in same way.

LIST OF IND-AS
Ind AS
First time adoption of Ind AS
101

Ind AS
Share Based Payment
102

Ind AS
Business Combination
103

Ind AS Insurance Contracts

104
Ind AS
Non-Current Assets Held for Sale and Discontinued Operations
105

Ind AS
Exploration for and Evaluation of Mineral Resources
106

Ind AS
Financial Instruments: Disclosures
107

Ind AS
Operating Segments
108

Ind AS
Financial Instruments
109

Ind AS
Consolidated Financial Statements
110

Ind AS
Joint Arrangements
111

Ind AS
Disclosure of Interests in Other Entities
112

Ind AS Fair Value Measurement

113

Ind AS
Regulatory Deferral Accounts
114

Ind AS
Revenue from Contracts with Customers(Applicable from April 2018)
115

Ind AS
Leases (Applicable from April 2019)
116

Ind AS 1 Presentation of Financial Statements

Ind AS 2 Inventories

Ind AS 7 Statement of Cash Flows

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

Ind AS
Events occurring after Reporting Period
10

Ind AS Construction Contracts (Omitted by the Companies (Indian Accounting Standards)

11 Amendment Rules, 2018)

Ind AS
Income Taxes
12

Ind AS
Property, Plant and Equipment
16

Ind AS
Employee Benefits
19

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

Ind AS
The Effects of Changes in Foreign Exchange Rates
21

Ind AS
Borrowing Costs
23

Ind AS
Related Party Disclosures
24

Ind AS Separate Financial Statements

27

Ind AS
Investments in Associates and Joint Ventures
28

Ind AS
Financial Reporting in Hyper inflationary Economies
29

Ind AS
Financial Instruments: Presentation
32

Ind AS
Earnings per Share
33

Ind AS
Interim Financial Reporting
34

Ind AS
Impairment of Assets
36

Ind AS
Provisions, Contingent Liabilities and Contingent Assets
37

Ind AS
Intangible Assets
38

Ind AS
Investment Property
40

Ind AS
Agriculture
41