Concept of Accounting Standards

CONCEPT OF ACCOUNTING STANDARDS:
We know that Generally Accepted Accounting Principles (GAAP) aims at bringing uniformity
and comparability in the financial statements. It can be seen that at many places, GAAP permits
a variety of alternative accounting treatments for the same item. For example, different methods
for valuation of stock give different results in financial statements.
Such practices sometimes can misguide intended users in taking decision relating to their field.
Keeping in view the problems faced by many users of accounting, a need for the development of
common accounting standards was aroused.
For this purpose, the Institute of Chartered Accountants of India (ICAI), which is also a member
of International Accounting Standards Committee (IASC), had constituted Accounting Standard
Board (ASB) in the year 1977. ASB identified the areas in which uniformity in accounting was
required. After detailed research and discussions, it prepared and submitted a draft to the ICAI.
After proper examination, ICAI finalized them and notified for its use in financial statements.
MEANING OF ACCOUNTING STANDARDS:
Accounting standards are the written statements consisting of rules and guidelines, issued by the
accounting institutions, for the preparation of uniform and consistent financial statements and
also for other disclosures affecting the different users of accounting information.
Accounting standards lay down the terms and conditions of accounting policies and practices by
way of codes, guidelines and adjustments for making the interpretation of the items appearing in
the financial statements easy and even their treatment in the books of account.
OBJECTIVES OF ACCOUNTING STANDARDS:
A. For bringing uniformity in accounting methods: Accounting standards are required to

bring uniformity in accounting methods by proposing standard treatments to the
accounting issue. For example, AS-6(Revised) states the methods for depreciation
accounting.
B. For improving the reliability of the financial statements: Accounting is a language of
business. There are many users of the information provided by accountants who take
various decisions relating to their field just on the basis of information contained in
financial statements. In this connection, it is necessary that the financial statements
should show true and fair view of the business concern. Accounting standards when used
give a sense of faith and reliability to various users. They also help the potential users of
the information contained in the financial statements by disclosure norms which make it
easy even for a layman to interpret the data. Accounting standards provide a concrete
theory base to the process of accounting. They provide uniformity in accounting which
makes the financial statements of different business units, for different years comparable
and again facilitate decision making.
C. Simplify the accounting information: Accounting standards prevent the users from
reaching any misleading conclusions and make the financial data simpler for everyone.
For example, AS-3 (Revised) clearly classifies the flows of cash in terms of ‘operating
activities’, ‘investing activities’ and ‘financing activities’.
D. Prevents frauds and manipulations: Accounting standards prevent manipulation of
data by the management and others. By codifying the accounting methods, frauds and
manipulations can be minimized.\
E. Helps auditors: Accounting standards lay down the terms and conditions for accounting
policies and practices by way of codes, guidelines and adjustments for making and
interpreting the items appearing in the financial statements. Thus, these terms, policies
and guidelines etc. become the basis for auditing the books of accounts.
ACCOUNTING STANDARD BOARD OF INDIA:
On 21st April 1977, The Institute of Chartered Accountants of India, as a premier accounting
body in our country, set up the “Accounting Standard Board” (ASB) to harmonies the diverse
accounting policies and practice prevalent in our country. The primary duty of ASB is to
formulate the accounting standards for India. These standards may be established by the Council
of the Institute in India. During formulation of accounting standards, the ASB considered the
applicable laws, usages, customs and the business environment existing in our country. For this
purpose ASB took the valued views and guidelines of various industrial houses, the Government,
and other interested parties. The body consists of the following members: Company Law Board,
CBDT, Central Board of Excise and Customs, Controller General of Accounts, SEBI,
Comptroller & Auditor General of India, UGC, Educational and Professional Institutions,
Council of the Institute and representatives of Industry, Banks.
1. Ind AS 101 First-time adoption of Ind AS

2. Ind AS 102 Share Based payments
3. Ind AS 103 Business Combination
4. Ind AS 104 Insurance Contracts
5. Ind AS 105 Non-Current Assets Held for Sale and Discontinued Operations
6. Ind AS 106 Exploration for and Evaluation of Mineral Resources
7. Ind AS 107 Financial Instruments: Disclosures
8. Ind AS 108 Operating Segments
9. Ind AS 109 Financial Instruments
10. Ind AS 110 Consolidated Financial Statements
11. Ind AS 111 Joint Arrangements
12. Ind AS 112 Disclosure of Interests in Other Entities
13. Ind AS 113 Fair Value Measurement
14. Ind AS 114 Regulatory Deferral Accounts
15. Ind AS 115 Revenue from Contracts with Customers
16. Ind AS 1 Presentation of Financial Statements
17. Ind AS 2 Inventories Accounting
Ind AS 7 &
18. Statement of Cash Flows
in only AS 3
19. Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors
20. Ind AS 10 Events after Reporting Period
21. Ind AS 11 Construction Contracts
22. Ind AS 12 Income Taxes
23. Ind AS 16 Property, Plant and Equipment
24. Ind AS 17 Leases
25. Ind AS 18 Revenue
26. Ind AS 19 Employee Benefits
Accounting for Government Grants and Disclosure of Government
27. Ind AS 20
Assistance
28. Ind AS 21 The Effects of Changes in Foreign Exchange Rates
29. Ind AS 23 Borrowing Costs
30. Ind AS 24 Related Party Disclosures
31. Ind AS 27 Separate Financial Statements
32. Ind AS 28 Investments in Associates and Joint Ventures
33. Ind AS 29 Financial Reporting in Hyper inflationary Economies
34. Ind AS 32 Financial Instruments: Presentation
35. Ind AS 33 Earnings per Share
36. Ind AS 34 Interim Financial Reporting
37. Ind AS 36 Impairment of Assets
38. Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
39. Ind AS 38 Intangible Assets
40. Ind AS 40 Investment Property
41. Ind AS 41 Agriculture

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Concept of Accounting Standards

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CONCEPT OF ACCOUNTING STANDARDS:

MEANING OF ACCOUNTING STANDARDS:

OBJECTIVES OF ACCOUNTING STANDARDS:

A. For bringing uniformity in accounting methods: Accounting standards are required to

ACCOUNTING STANDARD BOARD OF INDIA:

1. Ind AS 101 First-time adoption of Ind AS

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