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- 1. ACCOUNTING STANDARDS BY K.MYILSWAMY ASSISTANT PROFESSOR DEPARTMENT OFCOMMERCE PA & COMMERCE (PG) KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE - 29
- 2. ACCOUNTING – AGLANCE • A Businessman invests capital with the objective of making profit and increasing his resources. He incurs various expenses to operate his business and he receives income from difference sources. • He deals with several persons when buying and selling goods. He acquires various properties and assets from different places
- 3. Reason for developingaccounting • Practically its impossible to memorize and recollect all his business dealings by a businessman. • To relieve businessman from the burden of memorizing all business dealings and providing information accounting was developed
- 4. Objectives of Accounting •Maintenance of Accounting records • Ascertainment of Profit or loss • Depictions of Financial Position • Providing Information
- 5. Merits and Demeritsof Accounting Merits Systematic records Preparation of financial records Assessment of progress Aid to decision making Statutory requirements Information to interested people Demerits Can’t record all events Can’t quantify the morale of employees It can’t record emotions, feelings of employees
- 6. ACCOUNTING STANDARDS Accounting isUniversally accepted as “ the language of business”. The language must convey the same meaning to all of its users. Accounting Standards provide a frame work for the preparation of financial statements. So that credible financial statements of the highest quality can be produced.
- 7. Objectives of AccountingStandards To bring out uniformity in financial reporting To ensure consistency and comparability in data publishing To be useful tool to enhance corporate governance and responsibility
- 8. Need for AccountingStandards Uniformity Common principles Structured frame work Consistency Comparability Boundaries
- 9. FORMATION OF ACCOUNTING STANDARDSBOARD (ASB) The Institute of Chartered Accountants of India (ICAI) constituted Accounting Standard Board (ASB) on 21st April 1977. It consist of members of the council and representatives of Industry, Banks, Company Law Board, Central Board of Direct Taxes, Comptroller and Audit General of India and SEBI The ASB has to formulate standards after taking into consideration the applicable laws, customs, usages and business environment.
- 10. PROCEDURE FOR FORMULATIONAND ISSUING ACCOUNTING STANDARDS Accounting Standards Board (ASB) determines the broad areas in which Accounting standards need to be formulated. In the preparation of AS , ASB will be assisted by study groups constituted to consider specific subjects. In the formation of Study Groups, provision will be made for wide participation by the members of the Institute The draft of the proposed standard will include objectives, scope of the standard , Definition of the special terms used, recognition and measurement principles and finally presentation and disclosure requirements
- 11. Continued …… ASB willconsider the preliminary draft prepared by the Study Group and if any revision of the draft is required , ASB will make the same or refer the same to Study Group. The Exposure Draft of the proposed standard will be issued for comments by the members of the Institute and the public. The Exposure Draft will be sent to Specific bodies like Stock exchanges and other interested groups etc., After taking into the consideration the comments received, the draft of the proposed Standard will be finalised by the ASB and submitted to council of the ICAI.
- 12. Continued….. The Council ofthe ICAI will consider the final draft of the proposed Standard, and if found necessary, modify the same in the consultation with the ASB. The Accounting Standard on the relevant subject will then be issued by the ICAI
- 13. APPLICABILITY OF ACCOUNTING STANDARDS •The enterprises are classified and labeled as Level I, Level II and Level III companies. • Based on this classification and the category in which they fall the Accounting standards are applicable to the enterprises.
- 14. APPLICABILITY OF ACCOUNTINGSTANDARDS ENTITIES CORPORATE SMALL AND MEDIUM SIZED COMPANIES (SMC’s) NON – SMC’s NON - CORPORATE ENTITIES LIKE PARTNERSHIP FIRM ETC., LEVEL I LEVEL II LEVEL III
- 15. SMALL AND MEDIUMSIZED COMPANIES (SMC’c) • Whose equity or debt securities are not listed or not in the process of listing of any stock exchanges, whether in India or Outside India; • Which is not bank , financial institutions or an insurance company; • Whose turnover does not exceed Rs.50 crore in the immediately preceding accounting year. • Which does not have borrows ( including public deposit) in excess of Rs.10 Crore at any time during the preceding accounting year; and • Which is not a holding or subsidiary company of a company which is not a SMC’s
- 16. LEVEL I ENTERPRISES •Enterprises whose equity or debt securities are listed whether in India or outside India , Enterprises which are in the process of listing their equity or debt securities. • Banks including co-operative banks, Insurance Companies and Financial institutions • All commercial, industrial and business reporting enterprises, whose turnover not including ‘other income’ for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 50 crore.
- 17. • All commercial,industrial and business reporting enterprises having borrowings, including public deposits, in excess of Rs. 10 crores at any time during the accounting period. • Holding and subsidiary enterprises of any one of the above at any time during the accounting period
- 18. LEVEL II ENTERPRISES •All commercial, industrial and business reporting enterprises, whose turnover (excluding ‘other income’) for the immediately preceding accounting period on the basis of audited financial statements is greater than Rs. 1 Crore but less than Rs. 50 crore • All commercial, industrial and business reporting enterprises having borrowings, including public deposits, is greater Rs. 1 crore but less than Rs. 10 crores at any time during the accounting period • Holding and subsidiary enterprises of any one of the above at any time during the accounting period
- 19. LEVEL III ENTERPRISES Enterpriseswhich do not fall under Level I and Level II, are considered as Level III enterprises
- 20. List of ICAI’sMandatory Accounting Standards • AS 1 Disclosure of Accounting Policies • AS 2 Valuation of Inventories • AS 3 Cash Flow Statements • AS 4 Contingencies and Events Occurring After Balance Sheet Date • AS 5 Net profit or Loss for the period, Prior Period Items and Changes in Accounting Policies • AS 7 Construction Contracts • AS 9 Revenue Recognition • AS 10 Property, Plant and Equipment • AS 11 The Effects of Changes in Foreign Exchange Rates • AS 12 Government Grants
- 21. continued… • AS 13Accounting for Investments • AS 14 Accounting for Amalgamations • AS 15 Employee Benefits • AS 16 Borrowing Costs • AS 17 Segment Reporting • AS 18 Related Party Disclosures • AS 19 Leases • AS 20 Earnings Per Share • AS 21 Consolidated Financial Statements • AS 22 Accounting for Taxes on Income
- 22. continued… • AS 23Accounting for Investments in Associates • AS 24 Discontinuing Operations • AS 25 Interim Financial Reporting • AS 26 Intangible Assets • AS 27 Financial Reporting of Interests in Joint Ventures • AS 28 Impairment of Assets • AS 29 Provisions, Contingent Liabilities and Contingent Assets
- 23. Changes and highlights.. •ICAI has withdrawn the AS 8 on Accounting for Research and Development. • ICAI Amends AS 2, AS 4, AS 10, AS 13, AS 14, AS 21, AS 29 • ICAI withdraws AS 6. • ICAI withdraws its Announcement on Treatment of exchange differences under AS 11 • Companies (Accounting Standards) Amendment Rules, 2018 notified by MCA: AS 11 amended
- 24. List of ICAI’sNon-Mandatory Accounting Standards (AS 30~32) • ‘AS 30- Financial Instruments: Recognition and Measurement’ • ‘AS 31- Financial Instruments: Presentation’, • ‘AS 32- Financial Instruments: Disclosures’ stands withdrawn.
- 25. INDIAN ACCOUNTING STANDARDS •Indian Accounting Standard (abbreviated as Ind-AS) is the Accounting standard adopted by companies in India and issued under the supervision of Accounting Standards Board (ASB) • The Ind AS are named and numbered in the same way as the International Financial Reporting Standards (IFRS). National Advisory Committee on Accounting Standards (NACAS) recommend these standards to the Ministry of Corporate Affairs (MCA).
- 26. LIST OF INDIANACCOUNITNG STANDARDS • Ind AS 101 First-time adoption of Ind AS • Ind AS 102 Share Based Payment • Ind AS 103 Business Combination • Ind AS 104 Insurance Contract • Ind AS 105 Non-Current Assets Held for Sale and Discontinued Operations • Ind AS 106 Exploration for and Evaluation of Mineral Resources • Ind AS 107 Financial Instruments: Disclosures • Ind AS 108 Operating Segments • Ind AS 109 Financial Instruments • Ind AS 110 Consolidated Financial Statements
- 27. continued… • Ind AS111 Joint Arrangements • Ind AS 112 Disclosure of Interests in Other Entities • Ind AS 113 Fair Value Measurement • Ind AS 114 Regulatory Deferral Accounts • Ind AS 115 Revenue from Contracts with Customers(Applicable from April 2018) • Ind AS 116 • Leases (Applicable from April 2019) • Ind AS 1 Presentation of Financial Statements • Ind AS 2 Inventories Accounting • Ind AS 7 & in only AS 3 • Statement of Cash Flows • Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors • Ind AS 10 Events occurring after Reporting Period
- 28. Continued… • Ind AS11 Construction Contracts (Omitted by the Companies (Indian Accounting Standards) Amendment Rules, 2018) • Ind AS 12 Income Taxes • Ind AS 16 Property, Plant and Equipment • Ind AS 17 Leases (Omitted by the Companies (Indian Accounting Standards) Amendment Rules,2019) • Ind AS 18 Revenue (Omitted by the Companies (Indian Accounting Standards) Amendment Rules, 2018) • Ind AS 19 Employee Benefits • Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance • Ind AS 21 The Effects of Changes in Foreign Exchange Rates • Ind AS 23 Borrowing Costs
- 29. Continued… • Ind AS24 Related Party Disclosures • Ind AS 27 Separate Financial Statements • Ind AS 28 Investments in Associates and Joint Ventures • Ind AS 29 Financial Reporting in Hyper inflationary Economies • Ind AS 32 Financial Instruments: Presentation • Ind AS 33 Earnings per Share • Ind AS 34 Interim Financial Reporting • Ind AS 36 Impairment of Assets • Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets • Ind AS 38 Intangible Assets • Ind AS 40 Investment Property • Ind AS 41 Agriculture