ACCOUNTING STANDARDS

PROJECT
MOHAMMED ARIF KHAN (LEADER)
OVAIS BARDI
RIZWAN LOKHANDWALA
AHMED ABBASI
SHAHBAZ KHAN

Sameer Sir, Instructor

RIZVI COLLEGE
 INTRODUCTION

In the eighteenth and the nineteenth centuries, when sole

proprietorship and partnership were predominant forms of
organizations, the main function of financial reporting was to
provide information about the firm to its owner who manage and
owned them. With the advent of company form of organization
later on, the focus of financial reporting has become broader.
Accounting in its broadest sense, is considered with a
measurement of transaction(usually involving money as a
medium of exchange but occasionally resulting from barter)
transformation (the conversion usually through the process of
production of goods from one form to another) and events (all
other economics occurrences external and internal) that affect
position and performance of the entity.
The process of financial reporting of the result of all this
transaction, transformation, and events includes the publication
of sets of the financial statement. If this statement are to be
useful to the entire various group that rely upon them
(shareholders, creditor, employees, consumer, supplier, the
govt. etc.). Then unless the special purpose supplementary
statements are produced for particular user groups, it is
necessary that the general purpose financial statement achieve
the right balance between the often conflicting interests of the
various group users.
If published general purpose financial statement are to be
neutral vis-à-vis this entire different group, thereby striking a
fair balance between their often conflicting interests. It is of
course necessary that the accounting standard upon which they
are based should be oriented towards such an objective.
Financial statement has considerable utility in providing a basis
for decision and action by its user. Financial statement facilitates
comparison between different entities, assisting user in
formulating their future expectation. But this requires
consistency in using the same accounting policies year after
year.
MEANING OF ACCOUNTING
STANDARD
Accounting standard/policies are guideline of operative
significance. Standard are normative prescription relating to
accounting policies and practices. “Standard can be viewed as a
system of measurement and disclosure used in preparation of
financial statement. Accounting standard can be seen as
technical response to call for better financial and reporting or as
a reflection of society changing expectation of corporate
behavior and vehicle in social and political monitoring and
control of enterprise.

IASB Chairman.
Appointed by the Trustees. In late June 2000, the Trustees
announced the appointment of Sir David Tweedie as the first
Chairman of the restructured IASB. Sir David continues today as
IASB Chairman.

Board meetings.
The new IASB held its first official meeting in London in April
2001. The Board meets monthly (except August) for
approximately one week. Board meetings are normally held at
the IASB's office in London. Twice each year, the IASB and the US
Financial Accounting Standards Board (FASB) hold a joint meeting
(usually April and October). The April meeting is normally held at
the FASB's office in the United States.
NEED FOR HAVING ACCOUNTING
STANDARD

There is a need for making accounting information comparable

.in order that the user can take better economic decision out of
available comparable alternative, consistency and uniformity of
financial statement is called for.
The stability of our economic system depends upon the
confidence that the user group have in the fairness and
reliability of the financial statement on which they rely. It is the
function of accounting standard to create this general sense of
confidence by providing structural framework within which
credible financial statements can be produced.”
“accounting standard are vitally important in resolving potential
conflicts of financial interest among the various external group
that use and rely upon published financial statements . Such
conflicts are frequent and real. Thus, for example, potential
shareholder and existing shareholder may have opposite in
assessing the profitability and value of a company. Potential
share holder are likely to be dismayed if they buy shares on the
strength of published financial report which later turn out to
have been ‘optomistic’ present shareholder, who sell under such
circumstances, are likely to be more satisfied with the outcome,
and certainly more satisfied than if they retain holding on the
strength of unduly optimistic financial report.”
Thus, may also be potential conflicts of interest between
shareholder and creditor groups in the case of a company that is
running into financial difficulties and shareholders, employees,
customers, and suppliers frequently have conflicting in the
outcome of the measure companies economic performance.
In order to increase comparability of financial statements of
national an internationally placed companies harmonization of
accounting policies/ practices become inevitable and it is
because accounting standard are needed.
 THE ACCOUNTING STANDARDS-
SETTING PROCESS

The accounting standard setting, by its very nature, involves

reaching an optimal balance of the requirements of financial
information for various interest groups having a stake in financial
reporting. With a view to reach consensus, to the extent
possible, as to the requirements of the relevant interest-groups
and thereby bringing about general acceptance of the Accounting
Standards among such groups, considerable research,
consultations and discussions with the representatives of the
relevant interest-groups at different stages of standard
formulation becomes necessary. The standard-setting procedure
of the ASB, as briefly outlined below, is designed in such a way
so as to ensure such consultation and discussions:
 Identification of the broad areas by the ASB for formulating
the Accounting
Standards.
 Constitution of the study groups by the ASB for preparing the
preliminary drafts
Of the proposed Accounting Standards.
 Consideration of the preliminary draft prepared by the study
group by the ASB
And revision, if any, of the draft on the basis of deliberations at
the ASB.
 Circulation of the draft, so revised, among the Council
members of the ICAI and
12 specified outside bodies such as Standing Conference of
Public Enterprises
(SCOPE), Indian Banks’ Association, Confederation of Indian
Industry (CII),
Securities and Exchange Board of India (SEBI), Comptroller and
Auditor General
Of India (C& AG), and Ministry of Company Affairs, for comments.
 Meeting with the representatives of specified outside bodies
to ascertain their
Views on the draft of the proposed Accounting Standard.
 Finalisation of the Exposure Draft of the proposed Accounting
Standard on the
basis of comments received and discussion with the
representatives of specified
Outside bodies.
 Issuance of the Exposure Draft inviting public comments.
 Consideration of the comments received on the Exposure
Draft and finalisation of
The draft Accounting Standard by the ASB for submission to the
Council of the
ICAI for its consideration and approval for issuance.
 Consideration of the draft Accounting Standard by the Council
of the Institute,
and if found necessary, modification of the draft in consultation
with the ASB.
 ROLE OF NATIONAL ACCOUNTING
STANDARD BOARD

On the structure and purpose of the group, NSS members

discussed and agreed the following:
 Role and objectives of the NSS group – the main priority for
the group should be undertaking research, both pro-actively
and at the request of the IASB, aimed at influencing the IASB
in its deliberations. It was also agreed that the group should
submit a report to the IASB and the public on the outcome of
its meetings;
 Longer-term role: the NSS group discussed how it might
engage in the forthcoming IASCF constitutional review
(concluding in 2009) and what place – if any – the group saw
for itself with the IASB going forward. NSS members agreed
that to review the existing Statement of Best Practice:
Working Relationships between the IASB and other Accounting
Standard-Setters to see whether it remained relevant ;
 Membership of the NSS group – it was agreed that membership
of the group should be kept flexible and open to any standard-
setter (or regional organization such as EFRAG) that was
willing and able to invest the time and resources in attending
and actively participating in the group;
 Meetings of the group – it was agreed that the current cycle of
two meetings a year was about right, with one scheduled
adjacent to the IASB’s annual meeting with World Standard-
Setters. There was a general consensus that the meetings
should be in public and an investigation undertaken of how
the activities of the group might be better publicized through
the web;
 Chairmanship – it was agreed that Ian Mackintosh (Chairman of
the UK Accounting Standards Board, ASB) would continue to
chair the group for the time being.
OLD STRUCTURE: 1973 - 2000

The International Accounting Standards Committee (IASC) was

formed in 1973 through an agreement made by professional
accountancy bodies from Australia, Canada, France, Germany,
Japan, Mexico, the Netherlands, the United Kingdom and Ireland,
and the United States of America. Additional sponsoring members
were added in subsequent years, and in 1982 the sponsoring
"members" of the IASC comprised all of the professional
accountancy bodies that were members of the International
Federation of Accountants (IFAC).
Accounting standards were set by a part-time, volunteer IASC
Board that had 13 country members and up to 3 additional
organizational members. Each member was generally
represented by two "representatives" and one "technical
advisor". The individuals came from a wide range of backgrounds
– accounting practice, business (particularly multinational
businesses), financial analysis, accounting education, and
national accounting standard-setting. The Board also had a
number of observer members (including representatives of
IOSCO, FASB, and the European Commission) who participated in
the debate but did not vote.
Major components of the old IASC structure were:
 IASC Board – described above.
 Consultative Group – an advisory body representing a wide
range of international organizations with an interest in
accounting.
 Standing Interpretations Committee (SIC) – developed and
invited public comment on interpretations of IASC Standards,
subject to final approval by the IASC Board.
 Advisory Council – oversight body (despite its name, the
Advisory Council functioned more like the Board of Trustees of
the new IASC Foundation, described below).
 Steering Committees – expert task forces for individual agenda
projects.
The International Accounting Standards Committee was
essentially the structure, rather than a committee in the
traditional sense of a group of people.
 Historical Chronology of the IASC and IASB.
 More Historical Facts about the IASC
THE NEW STRUCTURE:
BACKGROUND AND CHRONOLOGY
After nearly 25 years of achievement, IASC concluded in 1997
that to continue to perform its role effectively, it must find a
way to bring about convergence between national accounting
standards and practices and high-quality global accounting
standards. To do that, IASC saw a need to change its structure. In
late 1997 IASC formed a Strategy Working Party to re-examine its
structure and strategy. (Jacques Manardo, Deloitte Touche
Tohmatsu Global Managing Partner-Strategic Clients, was a
member of that group.)
The Strategy Working Party published its Report, in the form of a
Discussion Paper, in December 1998. After soliciting comments,
the Working Party published its Final Recommendations in
November 1999.
The IASC Board approved the proposals unanimously in December
1999, and the IASC member bodies did the same in May 2000. A
new IASB Constitution took effect 1 July 2000. The standards-
setting body was renamed the International Accounting Standards
Board (IASB). It would operate under a new International
Accounting Standards Committee Foundation (IASCF).
On 1 April 2001, the new IASB took over from the IASC the
responsibility for setting International Accounting Standards.
In June 2005, the Trustees of the IASC Foundation completed
their 2003-2005 Constitution Review and approved a broad range
of Changes to the Constitution that went into effect on 1 July
2005. This web page reflects those changes.
 OVERVIEW OF THE RESTRUCTED
IASB
The IASB is organised under an independent Foundation named the
International Accounting Standards Committee Foundation (IASCF). That
Foundation is a not-for-profit corporation created under the laws of the
State of Delaware, United States of America, on 8 March 2001. Components
of the new structure:
 International Accounting Standards Board – has sole responsibility for
establishing International Financial Reporting Standards (IFRSs).
 IASC Foundation – oversees the work of the IASB, the structure, and
strategy, and has fundraising responsibility.
 International Financial Reporting Interpretations Committee (IFRIC) –
develops interpretations for approval by the IASB.
 Standards Advisory Council (SAC) – advises the IASB and the IASCF.
Working Groups – expert task forces for individual agenda projects.
 CONCLUSION

This is a study of 1982 largest selected companies on different

aspects of accounting standard setting in India. The main thrust
of the study has been on an examination of compliance of
accounting standard by the selected company, in both the
private and the public sector. The study also focuses on the
standard setting process of India, USA, UK and the nearby
developing countries. Comparative analysis of accounting
standard issued by USA, UK, International accounting committee
(IASC) and India has been made, besides the evaluation of
conceptual framework of USA and IASC.
The main findings of the study have been classified in the
following broad heads followed by recommendations:
Compliance of accounting standard
Users views on standard d setting in general and on individual
standards.
Standards setting process.
Comparison of standard issued by USA, UK, India and
International Accounting Standard Committee (IASC).
 GLOBAL SCENARIO

USA- FASB
Since 1973, the Financial Accounting Standards Board (FASB) has
been the designated organization in the private sector for
establishing standards of financial accounting and reporting.
Those standards govern the preparation of financial reports.
They are officially recognized as authoritative by the Securities
and Exchange Commission (Financial Reporting Release No. 1,
Section 101 and reaffirmed in its April 2003 Policy Statement)
and the American Institute of Certified Public Accountants (Rule
203, Rules of Professional Conduct, as amended May 1973 and
May 1979). Such standards are essential to the efficient
functioning of the economy because investors, creditors,
auditors, and others rely on credible, transparent, and
comparable financial information.
The Securities and Exchange Commission (SEC) has statutory
authority to establish financial accounting and reporting
standards for publicly held companies under the Securities
Exchange Act of 1934. Throughout its history, however, the
Commission’s policy has been to rely on the private sector for
this function to the extent that the private sector demonstrates
ability to fulfill the responsibility in the public interest.
EUROPEAN COUNTRIES:
UK- FRC (FINANCIAL REPORTING COUNCIL)
The FRC is a unified, independent regulator charged with
overseeing the development, publication and adoption of
accounting and auditing standards in the UK and is have the
following roles:
 setting standards for accounting and auditing
 enforcing and monitoring standards
 overseeing the self-regulatory professional bodies
The FRC was originally established in 1990 to provide general
policy guidance and promote good financial reporting through
two independent subsidiaries: the Accounting Standards Board
(ASB), charged with making, amending and withdrawing
accounting standards, and the Financial Reporting Review Panel
(FRRP) that examines apparent departures from statutory
accounting requirements including applicable accounting
standards.

ASIAN CHINA

When you look for an accounting firm in China, it is usually not

hard to find one. From small local firms to the "Big Four", all are
available. However, in today’s competitive and ever changing
business environment, what you need but hard to find, is
ingenuity, versatility, and creativity. That is the difference
between ordinary accountants and entrepreneurial professionals.
Hue-Ander CPAs are a team of such professionals and we are
ready to serve you.
Hua-Ander is one of the first partnership accounting firms
approved by the Ministry of Finance of the People's Republic of
China. Hua-Ander is internationally recognized for its technical
proficiency and high standards of quality. It has grown into a
prominent national firm driven by its commitment to clients'
interest and satisfaction.
Hua-Ander is a full service accounting firm providing diversified
services from accounting, audit, taxation to more
multidisciplinary advisory and transaction services. Our
international expertise and experience, facilitated by our strong
English communication ability, give us advantages in servicing
foreign entities in China. The knowledge and insight into the
practice of local tax and other regulatory requirements enable us
to provide practical solutions. High quality of services, personal
attention to each client and issue, plus reasonable fee, makes
Hua-Ander a best cost-effective alternative to the 'Big Four' in
China.

ASIA PACIFIC
AUSTRALIA

The Australian Accounting Standards Board is a Commonwealth

Agency that deals with standard setting in the private and public
sectors in Australia and has its own research and administrative
staff.
The Australian Accounting Standards Board (the Board) is
responsible for developing and issuing AASB Accounting
Standards (AASBs) and the “care and maintenance” of the body
of Standards. The Board's functions and powers are set out in the
Australian Securities and Investments Commission Act 2001.
Since 2002, the Board has been implementing the strategic
direction from the Financial Reporting Council to adopt
International Accounting Standards Board (IASB) Standards for
application to periods beginning on or after 1 January 2005. In
July 2004, the Board made a number of Standards that apply
from 2005 and comprise:
 Australian equivalents to IASB Standards
 ancillary AASB Standards supporting the Australian equivalents
to IASB Standards; and
 Other AASB Standards that apply to certain types of entities.
The AASB equivalents to IASB Standards comprise:
 AASB 1, AASB 2, etc. that are equivalent to IFRS 1, IFRS 2,
etc.; and
 AASB 101, AASB 102, etc. that are equivalent to IAS 1, IAS 2,
etc.