TOPIC

The paradigm shift in the economic environment in India during

last few years has led to increasing attention being devoted to
accounting standards as a means towards ensuring potent and
transparent financial reporting by corporate. Further, cross-
border raising of huge amount of capital has also generated
considerable interest in the generally accepted accounting
principles in advanced countries such as USA. Initiatives taken by
International Organisation Securities Commission (IOSCO)
towards propagating International Accounting Standards (IASs)/
International Financial Reporting Standards (IFRSs), issued by
the International Accounting Standards Board (IASB), as the
uniform language of business to protect the interests of
international investors have brought into focus the IASs/ IFRSs.
Accounting as a “language of business” communicates the financial
performance and position of an enterprise to various interested
parties by means of financial statements which have to exhibit a
‘true and fair’ view of financial results and its states of affairs.
Like any other language, accounting has its own complicated set
of rules. The basic conventions or rules used in preparing
financial statements had evolved over many years as a product of
the collective experience of practicing accountants. As a result a
wide variety of accounting methods were used by different
companies. It was, then, felt that there should be some
standardized set of rules and accounting principles to reduce or
eliminate confusing variations in the methods used to prepare
financial statements.
 The draft of the proposed standard will normally include the
following:
 (a) Objective of the Standard,
 (b) Scope of the Standard,
 (c) Definitions of the terms used in the Standard,
 (d) Recognition and measurement principles, wherever
applicable,
 (e) Presentation and disclosure requirements.
 However, such accounting rules should have a reasonable
degree of flexibility in view of specific circumstances of an
enterprise and also in line with the changes in the economic
environment, social needs, legal requirements and technological
developments. In order to suggest rules and criteria of
accounting measurements, several accounting standard setting
bodies were established in developed and developing countries.
The setting of accounting standards is a social decision.
Standards place restrictions on behaviour and therefore they
must be accepted by affected parties. The accounting standards
seek to describe the accounting principles, the valuation
techniques and the methods of applying the accounting
principles in the preparation and presentation of financial
statements so that they may give a true and fair view. The
ostensible purpose of the standard setting bodies is to promote
the dissemination of timely and useful financial information to
investors and certain other parties having an interest in
company’s economic performance.
 The ASB will consider the preliminary draft 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 or refer the
same to the Study Group. The ASB will circulate the draft of
the Accounting Standard to the Council members of the ICAI
and the following specified bodies for their comments:
 Department of Company Affairs (DCA)
 Comptroller and Auditor General of India (C and AG)
 Central Board of Direct Taxes (CBDT)
 The Institute of Cost and Works Accountants of India (ICWAI)
 The Institute of Company Secretaries of India (ICSI)
 Associated Chambers of Commerce and Industry
(ASSOCHAM), Confederation of Indian Industry (CII) and
Federation of Indian Chambers of Commerce and Industry
(FICCI)
 Reserve Bank of India (RBI)
 Securities and Exchange Board of India (SEBI)
 Standing Conference of Public Enterprises (SCOPE)
 Indian Banks’ Association (IBA)
Any other body considered relevant by the ASB keeping in view
the nature of the Accounting Standard. The ASB will hold a
meeting with the representatives of specified bodies to ascertain
their views on the draft of the proposed Accounting Standard. On
the basis of comments received and discussion with the
representatives of specified bodies, the ASB will finalize the
Exposure Draft of the proposed Accounting Standard.
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 specifically be sent to specified bodies (as
listed above), stock exchanges, and other interest groups, as
appropriate. After taking into consideration the comments
received, the draft of the proposed Standard will be finalized by
the ASB and submitted to the Council of the ICAI.
The Council of the ICAI will consider the 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.
 ACCOUNTING STANDARDS IN INDIA

 The need for accounting standards specifically for the

country’s economic environment was also felt in India.
Recognizing the need to harmonize the diverse
accounting policies and practices in India and keeping in
view the international developments in the field of
accounting, the Council of Institute of Chartered
Accountants of India (ICAI) constituted the Accounting
Standards Boards (ASB) in April, 1977. Over a period,
the ASB has issued 32 Accounting Standards till date.
CONCLUSION

 From the above discussion, it is clear that Accounting Standards

play a very vital role in preparation of Financial Statements.
Considering the need for accounting standards specifically
suitable for our economic environment and recognizing the need
to harmonies the diverse accounting policies and practices in
India and keeping in view the international developments in the
field, the council of Institute of Chartered Accountants of India
(ICAI) constituted the Accounting Standards Board (ASB)
which takes care of development, revision and issuance of
Accounting Standards in India.
 PRESENTED BY-

 SHASHWAT MISHRA
 SAURABH KUMAR YADAV
 SHASHANK DIXIT
 RAHUL TIWARI
 YASH SHUKLA