Accounting Standard’s

and their Relevance

December 8, 2006

Parveen Kumar
FCA, DISA
 Contents

c Background

c Accounting Standard- 1

c Accounting Standard-
Standard 9

c Questions
 History

c Accounting Standard Board (‘ASB’) - 1977

c Harmonization of diverse accounting policies and

practices in use in India
Formulation of Standards…

Substance Form Base

Base
Present Status

No. of Applicable Accounting Standards

180
158
160
140
120
100
80
60 41
40 28 29 31
21
20
0
IAS Australia India Japan UK USA

No. of Standards
 Accounting
g Standards in India

35
29
30

25
Number of AS

20
15
15 12
10

0
1992 1998 2006

Except AS-24 all are mandatory in nature for Level 1

 Applicability of AS

Level Turnover Borrowings Other

I > 50 cr > 10 cr Banking,

Insurance
II 40 lacs – 50 cr 1 cr > 10 cr -

III Not covered in I & II

Applicability of AS

AS not applicable on Level I & II

c AS 3 - Cash flow Statement

c AS 17 - Segmental Reporting
c AS 18 - Related party disclosure
c AS 24 - Discontinuing Operation
Compliance with AS

Management

Responsibility Auditor’s

??????
Structure of Indian AS’s

c Introduction

c Explanation

c Standard / Disclosure

c Date of Applicability
 AS--1
AS

Disclosure of
Accounting Policies
Introduction

c Issued in 1979 by ICAI

c First ever Accounting Standard

c Mandatory for all enterprises

c Deals with the disclosure

Fundamental Accounting
A
Assumptions
ti

c Going Concern

c Consistency

c Accrual
Differing Accounting Policies

c Some areas defined

c Other Accounting Standards issued

Major Consideration

c Selection and application of accounting policies

f Prudence
f Substance over Form
f Materiality
Disclosures

c All significant accounting policies.

c Any change in the accounting policies.

c If the fundamental accounting assumptions is not

followed.

c To be disclosed at one place.

 AS--9
AS

Revenue Recognition
Introduction

c Issued in 1985

c Mandatory for all enterprises after 01.04.1991.

c Deals with the bases for recognition of revenue in the

statement of profit and loss of an enterprise.
Introduction

c Does not deal with specifics revenues

c Deals with timing

g of recognition
g of revenue
Revenue Recognition
g

c Sale of Goods
f transfer of goods
f consideration is involved without any uncertainty.
f transfer of significant risk and awards

c Rendering of Services

f Proportionate completion method

f Completed service method

Cont….
Revenue Recognition

c Interest

c Royalties

c Dividend from investment in shares

Disclosures

c Disclosure of policies followed

c Disclosure of circumstances in which revenue

recognition has been postponed pending the
resolution of significant uncertainties.
Examples

c Delivery is delayed.

c Delivered subject to conditions.

c Guarantee case
Questions and Answers
Thanks