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m 
     

 
m   
 
m 
     

 may
may be defined as those rules
of action or conduct which are derived
from experience and practice and when
they prove useful, they become accepted
as principles of accounting.
m cccording to the  
   !

!  "    #
the principles which have substantial
authoritative support become a part of the
generally accepted accounting principles.
m |he general acceptance of the accounting
principles or practices depends upon { $
$ {  the following 


m % c principle is relevant to the
%
extent it results in information that is
meaningful and useful to the user of the
accounting information.
m "& % '
' connotes / signifies reliability
and trustworthiness.c
trustworthiness.c principle is objective to
the extent the accounting information is not
influenced by personal bias or judgement of
those who provide it. it. It also implies verifiability
which means that there is some way of
ascertaining the correctness of the information
reported.
m à "  
 c principle is feasible
/practicable / manageable to the extent
it can be implemented without much
complexity or cost.
   

 
àoundation pillars on which structure of
accounting is based
| | | |
cccounting Money cccounting Going
Entity Measurement Period Concern
cssumption
    

 
muality Revenue Historical Matching
Principle Recognition Cost

m àull misclosure - àinancial Statement


should act as means of conveying and not
concealing
w
    

 
|o make the information useful, the basic
assumptions and principles have to be
modified

Cost-Benefit Materiality Consistency


Cost-
Principle Principle Principle

Prudence |imeliness Substance over àorm


    
m cccounting Bodies all over the world have tried
to achieve some uniformity in accounting
policies by prescribing certain accounting
standards with respect to collection and
presentation of accounting information.
m |o formulate the accounting standards, they
have established a committee called as the
International cccounting Standards Committee
(in
( in 1973.
m cccounting bodies of most of the
countries, including the Institute of
Chartered cccountants of India, are
members of this body and these members
have resolved to conform to the standards
developed by IcSC
 

m |o formulate the accounting standards,
cccounting Bodies throughout the world
established  
    
(  
 (in 1973.
(in
m cccounting bodies of most of the
countries, including the    !
{

     ! 
#are
# are members of this body.
c
m International cccounting Standards (IcS)
have assumed great importance due to ƛ
m c. Globalization of the economy has led to
Indian companies expanding their
operations across the borders and this
calls for uniformity of accounts of units
located in different countries.
m B. àoreign Investors give more weightage
to accounts based on IcS.
Õ    c 
 
m IcS 1 Presentation of àinancial Statements
m IcS 2 Inventories
m IcS 3 Cash àlow Statements
m IcS 8 Net Profit or Loss for the period,
àundamental Errors and Changes in
cccounting Policies
m IcS10 Events after the Balance Sheet mate
m IcS 11 Construction Contracts
m IcS 12 Income |axes
m IcS 14 Segment Reporting
m IcS 15 Information Reflecting the Effects
of Changing Prices
m IcS 16 Property, Plant and Equipment
m IcS 17 Lease
m IcS 18 Revenue
m IcS 19 Employee Benefits
 c   
m |o harmonize diverse accounting policies
in India, the Institute of Chartered
cccountants of India ( ICcI) constituted
cccounting Standards Board (cSB) in 1977
m cSB, after considering applicable laws,
customs, usages and business
environment , formulated cccounting
Standards.
c  
     
c   
m In case the Company does not conform to
any mandatory accounting standards and
statement of all significant accounting
policies adopted in the preparation of
àinancial Statements, the auditor will have
to qualify his report justifying the
deviation. If he fails to do so, the ICcI can
take disciplinary action against such
auditor for professional misconduct. E.g.
Satyamsƞs auditor
c   c 
c  c
m |he cccounting Standards Board (cSB) of
the Institute of Chartered cccountants of
India (ICcI), has in line with International
Standards, issued 29 standards to be
followed by its members while auditing
the accounts of Companies.
Õ  c 
m cS 1 misclosure of cccounting Policies
m cS 2 Valuation of Inventories
m cS 3 Cash àlow Statements
m cS 4 Contingencies and Events occurring
after the Balance Sheet mate
m cS 5 Net Profit or Loss for the Period,
Prior Period and Extraordinary Items and
Changes in cccounting Policies
m cS 6 mepreciation cccounting
m cS 7 Construction Contracts
m cS 8 cccounting for Research &
mevelopment
m cS 9 Revenue Recognition
m cS 10 cccounting for àixed cssets
m cS 11 |he Effects of Changes in àoreign
Exchange Rate
m cS 12 cccounting for Govt Grants
m cS 13 cccounting for Investments
m cS 14 cccounting for cmalgamation
m cS 15 cccounting for Retirement Benefits
m cS 16 Borrowing Costs
m cS 17 Segment Reporting
m cS 18 Related Party misclosures
m cS 19 Lease
cc 
m (established by à()
(established à()(àinancial
(àinancial
cccounting Standard Board and
(cmerican
 (cmerican Institute of Certified
Public cccountants)
m |he US GccP has nearly 100 cccounting
Standards as compared to 29 in India.
   c   
cc
m 1. Reporting v/s misclosure
m 2.àorm v/s Sustance
m 3.cccounting vs cnalysis
m 4.Globalisation vs Localisation
 cc
 cc
m 1. àull disclosure
m 2.Consolidation of Group Company c/ cs
c/cs
m 3. Provision for deferred tax liability
m 4. misclosure of EPS
m 5. misclosure of Related Party
|ransactions
m 6.Cash àlow Statement is compulsory