Friends, here I'm complying an article which contains everything about the Accounting Standard (A.S.) take a look and share the post. Also include a short trick to learn Accounting Standards.
Framework of Accounting Standard:
At the outset, with the changing scenario, there has arisen a great complexity in understanding the applicability of accounting standards apart from understanding the text of accounting standards. Thus, it has become utmost important to make ourselves aware of what actually such standards demand and from whom?
There are different sets of standards concerned with accounting, which are often heard by us namely;
1. Accounting Standard (AS)
2. International Accounting Standard (IAS)
3. International Financial Reporting Standard (IFRS)
4. Indian Accounting Standard (Ind - AS)
To facilitate I have tried my best to make summarized and contributory matter after learning from CA Parveen Sharma Sir, which is here – in – below:
1. Accounting Standard:
- For Non – Companies Entities: Accounting Standards in India was first issued by Accounting Standard Board (ASB, a body of ICAI, constituted In 1981) It has so far issued AS – 1 to 32 ( AS – 8 has been withdrawn )
- AS-30, 31, 32 are still recommendatory.
- Such AS issued by ICAI are concerned with all entities other than Companies.
- AS issued by ICAI are applied on Members of the ICAI only for attesting function on financial statements. A chartered accountant before attesting financial statements of all entities must ensure the applicability of AS.
- All accounting standards issued by ICAI are exempt in case for 100% charitable and/or religious institutions.
- Certain AS are fully exempted and some exemptions have been provided in some AS based on classification of all entities (Other than Companies) into 3 levels.
| Level | Exemption |
| Level – I | No Exemption |
| Level – II | Full Exemption – AS- 3, 17 Partial Exemption – AS – 15, 19, 20, 28, 29 |
| Level – III | Full Exemption – AS- 3, 17, 18, 24 Partial Exemption – AS – 15, 19, 20, 28, 29 |
For Companies:
In 1999, Ministry of Corporate Affairs constituted a committee, called National Advisory Committee on Accounting Standards (NACAS under section 210A of Companies Act) to properly manage accounting and to regulate the standards time to time.
- On 7th, December, 2006, MCA framed Companies Accounting Standard Rules, 2006 and thereby notified standards applicable for companies.
- AS notified by NACAS are applicable to companies (under section 211(3C) as well as on auditors (under section 227).
- NACAS has so far notified AS 1 to 29 (Except AS-8 (Withdrawn).
- Certain AS are fully exempt and some partial exemptions has been provided in some AS based on classification of Companies into 2 types.
| Type | Exemption |
| NON - SMC | No Exemption |
| SMC | Full Exemption – AS- 3, 17 Partial Exemption – AS – 15, 19, 20, 28, 29 |
7. Difference between AS of ICAI and AS notified by NACAS
Difference between these two sets of standards means difference between Standards applicable for Entities other than companies and for companies.
NACAS on 07.12.2006 notified all AS of ICAI as its standards with certain minor alterations. So far it has brought a change in AS-11 by inserting Para – 46 and 46A.
Still differences in these two sets of AS are as follows:
| Basis of difference | AS- ICAI | AS- NACAS |
| Heading | Accounting Standard | Main Principle |
| Para paras are renumbered | Deleted paras are not renumbered | Deleted |
| Explanation | In the form of ASI | Added in the Standard as explanation |
| AS-11 | para 1 to 45 | para 46 and 46A has been inserted by NACAS |
Summary of Accounting Standard:
1. In case of entities other than companies AS – issued by ICAI are applied whereas in case of companies AS – notified by NACAS are applied.
AS- Wise classification
2. AS – 1, 2, 4 to 14,16, 21 to 23, 25 to 27 are applied to all type of entities with no exemption ( Whether company or not, irrespective of turnover and size of business)
[However, It is again to be noted that In case of non companies, standards becomes mandatory when accounts are to be attested by CA since AS – issued by ICAI are applied on members of ICAI on attesting function.]
3. AS- 3 and 17 is fully exempt for SMCs and Level-II and III enterprises.
4. AS- 18 & 24 is fully exempt only for Level-III enterprises.
5. AS- 15, 19,20,28,29 is partially exempted for all SMCs, level-II and Level – III enterprises.
2. International Accounting Standards (IAS) and International Financial Reporting Standards( IFRS) & Indian Accounting Standard (Ind – AS)
a. In 1973, The International Accounting Standard Committee (IASC) was formed in U.K. with 9 nations which issued IAS 1 to 41 by 2002.
b. In 2002, The International Accounting Standard Board (IASB) was formed with more than 100 nations to standardize and establish harmonization in accounting all over the world. India is also member of this board.
c. IASB adopted all 41 IASs issued by IASC as its own standards.
d. IASB has also so far issued 9 International Financial Reporting Standards (IFRS).
e. Thus IASB has at present 41 IAS and 9 IFRS which are to be applied by all nations as per their convenience.
f. These IAS and IFRS are to be applied in difference nations by way of two means:
i. Adoption of all IAS / IFRS
ii. Convergence its own standards into IAS/ IFRS
g. In 2006, In G-20 Meeting India has also committed to apply IFRS & IAS through Convergence medium.
h. In India These Converged form of IAS/ IFRS is termed as “Indian Accounting Standards” (IND – AS).
i. On 13.05.2010, MCA through a press release gave a roadmap for application of Ind – AS in India, with effect from 01.04.2011 to 01.04.2014 based on Size of company and the industry to which it pertains.
j. In India, on 25.02.2011, NACAS has notified 35 Ind – AS.
k. In India application of Ind – AS is still pending and new roadmap has not been come out from ministry so far.
3. Summary of all standards:
1. Thus at present mainly there are following type of accounting standards:
a. AS – ICAI: 32 (Except AS- 8)
b. AS – NACAS: 29 (Except AS- 8)
c. IAS: 41
d. IFRS: 9
e. Ind- AS: 35
2. At present in India, only AS – ICAI and AS – NACAS are applicable while application of Ind – AS is still pending.
3. Even after application of Ind – AS:
• AS - ICAI will continue to be applied for non – corporate entities.
• AS – NACAS will continue to be applied for companies which are not covered by application (In roadmap ) of Ind – AS.
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source: http://www.caclubindia.com
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Here is a way to easily remember AS
I guess this will be useful to beginners, for me this helps a lot even now, bcoz i get stuck in simple things now and then
AS-1 Disclosure of Accounting Policies
AS-2 Valuation of Inventories, 1 and 2 will be easily remembered as they are first two
AS-3 Cash Flow Statements
has three words 1)CASH 2)FLOW 3)STATEMNTS
AS-4 Contingencies and Events Occuring after the Balance Sheet Date
relates to transactions which fall outside the four walls of a room
AS-5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies
thats my lucky number so have your own strategy
AS-7 Construction Contracts
we give weekly(7 days) wages for labour of construction activity
AS-8 Accounting for Research and Development
(No Need to Learn, this is merged with AS-26)
AS-9 Revenue Recognition
this 9 is the highest number...after this zero will be added and the series continuos, many business people prefer combination of number 9 wherever they have to choose as they believe it earns highest revenue
AS-10 Accounting for Fixed Assets
there are 10 assets for which COA and COI is taken as nill as per sec55 of IT Act
AS-11 The Effects of Changes in Foreign Exchange Rates
the first thing flashes in our mind when we read forex is $ dollar, in the symbol S is crossed by 2 lines, i.e.,11
AS-12 Accounting for Government Grants
Govt many times say that you invest 1rupee we will provide 2rupees as subsidy 1+2=12
AS-13 Accounting for Investments
AS-14 Accounting for Amalgamations
we are quite familiar with 13 and 14 in our accounts
for 14- 4 companies A,B,C,D were amalgamated and 1 company is formed 1 formed by 4, 1 by 4=14
AS-15 Employee Benefits
thats my birthday, for you people sec15 of IT act is charging section for Income from salaries(paid to employee)
AS-16 Borrowing Costs
3 sources are Equity Preference Debt as per COC of FM, when you borrow funds firms always try earn income atleast by double, 3X2=6
AS-20 Earnings Per Share
Shareholder expects to double his property when he invests in shares, usually shares are for 10/- each
AS-21 Consolidated Financial Statements
consolidation of 2 companies FS in 1 company=21
AS-22 Accounting for Taxes on Income
In PCC tax is 2nd paper in 2nd group
Best Wishes, Yogesh Gupta you can find me @ www.facebook.com/mr.yogeshgupta3
Thank you so much for posting Yogesh .. helped me a lot to clear my queries..Keep posting.. God Bless
ReplyDeleteGOOD ONE POST ......!!!!!
ReplyDeletethanks for sharing Accounting knowledge with us, your all posts are very good
ReplyDeleteGreat Effort....Highly Appreciated
ReplyDeleteThanks
ReplyDeletethanks all.. :)
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