CONCEPT & PROCEDURE

OF ISSUING INDIAN
ACCOUNTING
STANDARDS

GROUP 3
 CONCEPT
OF
ACCOUNTING
STANDARDS
What is Accounting?
Accounting is the language of
business. It may also be stated that
accounting is the language of all
organizations. All financial
information (i.e. nature of financial
activities, financial position, financial
results, present trend and further
prospects etc.) are available through
accounting.
Need for Accouting
Standards?
The financial information is
communicated to the users (both
internal as well as external) of accounting
information by preparing and presenting
the financial statements. As such, it
becomes necessary to develop some
GAAP (Generally Accepted Accounting
Principles) while preparing the financial
statements by which the language of the
business can be communicated to the
users.
In addition, there must not be any
ambiguity and uncertainty relating
to the facts, figures and terms
which are contained in the financial
statements and will be presented
to the users of accounting
information. In recent years, due to
the growth of multinational
corporations, certain international
standards are required in order to
avoid confusion relating to the
financial status and operating
results.
Thus, the principles which are
formulated or developed in this
regard and which are approved
by the specialized bodies are
known as “Accounting
Standards.” Practically, it will
help us to assess the progress or
otherwise of a firm after
comparing the actual
performances with the standard.
Definition Of Accouting Standards?
According to some authorities like Yorston, Smyth and Brown- ‘a
standard is a performance target or goal or an agreed criterion of what
is proper practice in a particular situation.’ There are some other
authorities who prefer to use the term “Accounting Principles” in place
of “Accounting Standards”.

In short, Accounting Standard may be defined as the accounting

principles and rules which are to be followed for various accounting
treatments while preparing financial statements on uniform basis and
which will reveal the same meaning to all the interested groups who
will use the same. Thus, the Standards are considered as a guide for
maintaining and preparing accounts.
Scope of Accounting Standards
Accounting standards will be issued which are in conformity with the
provisions of laws customs and business environment in India.
The Accounting standards are intended to apply only to those items
which are useful and valuables. A particular standard will come into effect
will be specified by ICAI.
Emphasis would be on laying down accounting principles and not the
detailed rules for applications.
The ASB may consider any issue regarding interpretation of any
Accounting Standard.
It provide presentation of financial statements in the country.
The institute may use its endeavors to adopt the Accounting standards in
order to achieve uniformity in its presentation.
Meaning and Nature of
Accounting Principles
Accounting standards are codified as
statements of accounting rules and
guidelines for preparing the uniform and
consistent financial statements.
Accounting standards are written policy
documents issued by expert accounting
body. Covering such aspects as
measurement and disclosure of
accounting transactions in the financial
statements.
 PROCEDURE
FOR ISSUING
AN
ACCOUNTING
STANDARD
 ACCOUNTING STANDARD
BOARD IN INDIA (ASB)
The Accounting Standard Board (ASB) is a
committee belonging to the ICAI, which has
the responsibility for the creation of
Accounting Standards in India, after the
passing of statute by the government of
India.
FUNCTIONS OF ASB
To conceive of and suggest areas in which Accounting
Standards need to be developed.
To formulate Accounting Standards through a process
that is comprehensive, and inclusive with a view to
assisting the Council of the ICAI in evolving and
establishing Accounting Standards to discharge its role
of national standard-setter by recommending
Accounting Standards (Indian Accounting Standards
(Ind AS) and Accounting Standards (AS)) to Government
of India for notification under relevant provisions of
CA. Pramod Jain
various statutes, such as, Companies Act 2013, Limited
(Chairman, ASB)
Liability Partnership Act, 2008.
FUNCTIONS OF ASB
To review, at regular intervals, the Accounting
Standards from the point of view of changed
conditions, practical challenges and
implementation experience of the Accounting
Standards, if any, and revise the same appropriately.

To provide, from time to time, interpretations and

guidance to support implementation of Accounting
Standards including publishing education material,
guidance notes, technical guides, implementation
guide, e-learning tools etc.
PROCEDURE FOR ISSUING
Broadly, the following procedure is adopted for formulating
Accounting Standards:

The ASB determines the areas in which

01 Accounting Standards need to be
formulated and the priority in regard to the
selection thereof.

In the preparation of Accounting

02 Standards, the ASB will be assisted by
Study Groups constituted to consider
specific subjects.
 The draft of the proposed standard will
03 normally include the following:

Objective of the Standard

Scope of the Standard
Definitions of the terms used in the
Standard
Recognition and measurement
principles, wherever applicable
Presentation and disclosure
requirements
 The ASB will consider the preliminary draft
04 prepared by the Study Group and if any
revision of the draft is required on the basis
of deliberations, the ASB will make the
same.

The Exposure Draft of the proposed

05 Standard will be issued for comments by
the members of the Institute and the
public. The Exposure Draft will specifically
be sent to specified bodies, stock
exchanges, and other interest groups, as
appropriate.
 After taking into consideration the
06 comments received, the draft of the
proposed Standard will be finalised by the
ASB and submitted to the Council of the
ICAI.
The Council of the ICAI will consider the
07 final draft of the proposed Standard, and if
found necessary, modify the same in
consultation with the ASB. The Accounting
Standard on the relevant subject will then
be issued by the ICAI.
For a substantive revision of an Accounting
08 Standard, the procedure followed for
formulation of a new Accounting Standard,
as detailed in the previous page, will be
followed.
 Subsequent to issuance of an Accounting Standard, some
09 aspect(s) may require revision which are not substantive in
nature. For this purpose, the ICAI may make limited revision
to an Accounting Standard. The procedure followed for the
limited revision will substantially be the same as that to be
followed for formulation of an Accounting Standard,
ensuring that sufficient opportunity is given to various
interest groups and the general public to react to the
proposal for limited revision.
VARIOUS
ACCOUNTING
STANDARDS
 Various Accounting Standards
NO OF ACCOUNTING STANDARD TITLE OF ACCOUNTING STANDARD

AS-1 Disclosure of Accounting Policies

AS-2 Valuation of Inventories

AS-3 Cash Flow Statement

AS-4 Contingencies and Events occuring after Balance sheet date

AS-5 Prior Period and Extraordinary Items and Changes in Accounting Policies

AS-6 Depriciation Accounting

AS-7 Accounting for construction contracts

AS-8 Withdrawn and included in AS-26

AS-9 Revenue recognition

AS-10 Accounting for fixed assets

NO OF ACCOUNTING STANDARD TITLE OF ACCOUNTING STANDARD

AS-11 Effects if changes in foreign Exchange Rates

AS-12 Accounting for govt. Grants

AS-13 Accounting for Investments

AS-14 Accounting for Amalgamation

Accounting for Retirement Benefits in the financial statements of

AS-15
Employers

AS-16 Borrowing Costs

AS-17 Segment Reporting

AS-18 Related Partly Disclosures

AS-19 Leases

AS-20 Earnings per shares

AS-21 Consolidated Financial Statement

NO OF ACCOUNTING STANDARD TITLE OF ACCOUNTING STANDARD

AS-22 Accounting for Taxes on income

Accounting for Investment in Associated in Consolidated financial

AS-23
Statements

AS-24 Discontinuing operations

AS-25 Interim Financial Reporting

AS-26 Intangible Assets

AS-27 Financial Reporting of interests in Joint Venture

AS-28 Impairment of Assets

AS-29 Provisions, Contingent Liabilities and Contingent Assets

AS-30 Financial instrument : Recognition and measurement

AS-31 Financial instrument presentation

AS-32 Financial instruments Disclosures

 ADVANTAGES OF
ACCONTING STANDARD
01 FACILITATES COMPARISON
03 DISCLOSURE OF FACTS

HELPS IN COMPARISION OF FINANCIAL HELPS IN DISCLOSURE OF MANY IMPORTANT

STATEMENTS OF ORGANISATIONS FROM FACTS BEFORE THE USERS
DIFFERENT PARTS OF THE WORLD

02 MEASURING EFFICIENCY
04 REDUCTION OF VARIABILITY

HELPS AVOIDS CONFUSING VARIATIONS THE

USEFUL IN MEASURING THE EFFICIENCY OF
ACCOUNTING TREATMENT
MANAGEMENT REGARDING PROFITABILITY,
LIQUIDITY, SOLVENCY.
 DISADVANTAGES OF
ACCONTING STANDARD
01 RIGIDITY
03 RESTRICTION ON ALTERNATIVE TREATMENTS

THE STANDARDS ARE VERY RIGID IN THEY DO NOT PROVIDE ANY CHANCE OF
APPLICATION SELECTION OUT OF SET STANDARDS FIXED.

02 TIME CONSUMING
04 HIGH COST

TAKES A LOT OF TIME AND EFFORT TO COSTLY TO HIRE QUALIFIED PEOPLE TO

MAKE ACCOUNTS ACCORDING TO THE MAKE ACCOUNTS ACCORDING TO THESE
GIVEN STANDARDS STANDARDS
Group 3 Ashwarya Jha, 219035

Members Gurasees Singh, 219053

Kunvar Singh, 219012

Pranav Chugh, 219050

Tanishq Garg, 219016

THANKS