INTRODUCTION:

Accounting standards, based on a meaningful conceptual framework, are a pre-requisite to achieving intra-country and inter-country uniformity in accounting procedure & disclosure practices for accounting items & events. Accounting Standards are used as one of the main compulsory regulatory mechanisms for preparation of general-purpose financial reports and subsequent audit of the same, in almost all countries of the world. Accounting standards are concerned with the system of measurement and disclosure rules for preparation and presentation of financial statements. Accounting standards are devised to furnish useful information to different users of the financial statements such as shareholders, creditors, lenders, management, investors, suppliers, competitors, researchers, regulatory bodies and society at large and so on. In fact, such statements are designed and prescribed so as to improve & benchmark the quality of financial reporting. The rapid growth of international trade and internationalization of firms, the developments of new communication technologies and the emergence of international competitive forces is perturbing the financial environment to a great extent. Under this global business scenario, the residents of the business community are in a bad need of a common accounting language that should be spoken by all of them across the globe. A financial reporting system of global standard is a prerequisite for attracting foreign as well as present and prospective investors at home alike that should be achieved through harmonization of accounting standards. In India, the Statements on Accounting Standards are issued by the Institute Of Chartered Accountants of India (ICAI) to establish standards that have to be complied with to ensure that financial statements are prepared in accordance with generally accepted accounting standards in India (India GAAP ). Adopting IAS in India, it is taking average 6.13 years for one accounting standard. The deviations of Indian Accounting Standards from International Accounting Standards are mainly due to the legal and/ or regulatory framework prevailing in the country & state of economic environment in the country. However, to reap the benefits of globalization & liberalization, it is necessary the Indian Accounting Standards may be converged with International Accounting Standards. Hence, the purpose of present study is to analyze the comparison between Indian Accounting Standards with International Accounting Standards.

What are Accounting Standards?

Accounting Standards are written policy documents issues by the expert accounting body or by government or other regulatory body covering the aspects of recognition, measurement, presentation and disclosure of accounting transactions in financial statement. Accounting Standards are the statements of code of practice of the regulatory accounting bodies that are to be observed in the preparation of financial statements. In layman terms accounting standards are the written documents issued by the experts institutes or other regulatory bodies covering various aspects of measurement treatment, presentation and disclosure of accounting transactions.

Who issues Accounting Standards in India?

The Institute of Chartered Accountants of India (ICAI) reorganizing the need to harmonies the diverse accounting policies and practices at present in use in India constituted accounting standard board (ASB) on April 21, 1977. The main role of ASB is to formulate accounting standards from time to time.

About ICAI:
The Institute of Chartered Accountants of India (ICAI) is a statutory body established under the Chartered Accountants act 1949 (Act No.46 of 1949) for the regulation of the profession of Chartered Accountants in India.

During its 61 years of existence, ICAI has achieved recognition as a premier accounting body not only in the country but also globally, for its contribution in the fields of education, professional development maintenance of high accounting, auditing and ethical standards. ICAI now is the second largest accounting body in the whole world.

Procedure of formulating Accounting Standards in India:The institute of Chartered Accountant of India (ICAI) recognizing the need to harmonize the diverse accounting policies and practices, constituted an accounting standards boards (ASB) on April 21, 1977. The main function of ASB so that such standards may be mandated by the council of ICAI. While formulating the standards in India, ASB will take into consideration the applicable laws custom usages and business environment. ICAI is one of the members of International Accounting Standards Committee (IASC) and has agreed to support the objectives of IASC. ASB will give due consideration to IAS and try to integrate them to the extent possible in light of the considerations and practices pre-vailing in India. The accounting standards issued will apply to General Purpose Financial Statement this would include balance-sheet, Profit & Loss A/c and other statement and explanatory notes which form part thereof issued for the use of shareholders or members, Creditors, Employees and public

at large. The Accounting Standards are intended to apply only to items which are material. The standards are generally expected to apply prospectively unless otherwise stated.

Broadly the following procedure will be adopted for formulating Accounting Standards: ASB shall determine the board areas in which accounting standards need

to be formulated and the priority in regards to the selection thereof. In the preparation of the accounting standards ASB will be assisted by study groups constituted to consider specific subjects. In the formation of the study groups provision will be made for wide participation by the members of ICAI and others.
ASB will also hold a dialogue with the representative of the Government,

Public sector, Industry and other organizations for ascertaining their views. Based on the above an exposure draft of the proposed standard will be prepared and issued for comments by members of ICAI and the public at large. After taking into consideration the comments received the exposure draft will be finalized by the ASB and submitted to the council of ICAI.
The council of ICAI will consider the final draft and if found necessary

modify the same in consultation with ASB. The accounting standard on the relevant subject will then be issued under the authority of the council.

Statements of Accounting Standards (AS 3) Revised: Cash Flow Statements: The following is the text of the revised Accounting Standard (AS) 3, 'Cash Flow Statements', issued by the Council of the Institute of Chartered Accountants of India. This Standard supersedes Accounting Standard (AS) 3, 'Changes in Financial Position', issued in June, 1981. In the initial years, this accounting standard will be recommendatory in character. During this period, this standard is recommended for use by companies listed on a recognized stock exchange and other commercial, industrial and business enterprises in the public and private sectors.

Objective:
Information about the cash flows of an enterprise is useful in providing users of financial statements with a basis to assess the ability of the enterprise to generate cash and cash equivalents and the needs of the enterprise to utilize those cash flows. The economic decisions that are taken by users require an evaluation of the ability of an enterprise to generate cash and cash equivalents and the timing and certainty of their generation. The Statement deals with the provision of information about the historical changes in cash and cash equivalents of an enterprise by means of a cash flow statement which classifies cash flows during the period from operating, investing and financing activities.

Scope:
1. An enterprise should prepare a cash flow statement and should present it for each period for which financial statements are presented. 2. Users of an enterprise's financial statements are interested in how the enterprise generates and uses cash and cash equivalents. This is the case regardless of the nature of the enterprise's activities and irrespective of whether cash can be viewed as the product of the enterprise, as may be the case with a financial enterprise. Enterprises need cash for essentially the same reasons, however different their principal revenue-producing activities might be. They need cash to conduct their operations, to pay their obligations, and to provide returns to their investors.

Definitions:
The following terms are used in this Statement with the meanings specified: Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. Cash flows are inflows and outflows of cash and cash equivalents. Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Financing activities are activities that result in changes in the size and composition of the owners' capital (including preference share capital in the case of a company) and borrowings of the enterprise.