AS - INTRODUCTION

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What is Accounting Standards ? Are written documents, policy documents issued by expert accounting body or by Government or other regulatory body converting the aspect of recognition, measurement, Treatment, presentation and disclosure of accounting transactions in the financial statem – Ents. Accounting Standards in India are issued by the Institute of Chartered Accountants of India (ICAI) INTRODUCTION ACCOUNTING STANDARDS

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Objective of Accounting Standards:- Is to standardize the diverse accounting policies & Practices with a view to eliminate to the extent possible the non- comparability of financial Statement and add the reliability to the financial statements. The Institute of Chartered Accountant of India, recognizing the need to harmonize the Diverse accounting policies and practices, constituted an Accounting Standard Board (ASB) on 21st April, 1977. Advantages: Standards reduces to a reasonable extent or eliminate altogether confusion variation in the accounting treatments used to prepare the financial statements. There are certain area where important information are not required by law to be disclosed, standards may call for disclosure beyond that required by law. It facilitates comparison of financial statements of different companies situated at different places.

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Disadvantages: There may be a trend towards rigidity and away from flexibility in applying accounting standards. Difference in accounting standards are bound to be because of differences in the traditio- ns and legal system from one country to another. Accounting standards cannot override the law. The standard are required to be framed with in the ambit of prevailing status even though it is not an acceptable standard. Note: So far ICAI has issued 29 Accounting Standards. However AS-8 on “Research & Development” was withdrawn consequent to issue of AS-26 “Intangible Assets”. Effectively there are 28 Accounting Standards at present.

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Scope of Accounting Standards Efforts will be made to issue Accounting Standards which are in conformity with the provisions of the applicable laws, customs, usage and business environment in India. However, if a particular Accounting Standard is found to be not in conformity with law, the provision of said law will prevail and the financial statements should be prepared in conformity with such law. The Accounting Standards are intended to apply only to items which are material. Any limitations with regard to applicability of a specific Accounting Standards will be made clear by the ICAI from time to time. The date from which particular Standard will come into effect, as well as class of enterprises to which it will apply, will also be specified by the ICAI. However, no standard will have retroactive application, unless otherwise stated. In formulation of Accounting Standards, the emphasis would be on laying down accounti - ng principles and not detailed rules for application and implementation thereof. The Standard formulated by the Accounting Standard Board{ASB} include paragraphs in bold italic type indicate the main principles. An individual standard should be read in the context of the objective stated in that standard and this preface.

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The ASB may considered any issue requiring interpretation on any Accounting Standard. Interpretations will be issued under the authority of the Council. The authority of Interpretation is the same as that of Accounting Standards to which it relates. Note: NACAS – Under section 210A of companies Act, 1956 the Central Government by notification has constituted a committee to advise the Central Government on the formulation and laying down of accounting policy and accounting standard for adaptation by companies or class of companies specified under the Act. Based on the recommendations of NACAS, the Central Government has notified AS-1 to AS-9 to AS- 29 in December 2006 in the form of companies [Accounting Standard] Rules, 2006.

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Note 1. AS – 21, AS – 23 & AS – 27 [Relating to Consolidated Financial Statements] are required to be complied with by an entity if the entity, Pursuant to the requirements of a statute/ regulator or Voluntarily, prepares & presents Consolidated Financial Statements. Note 2. Accounting Standard is not mandatory. However if an entity is required or elect to prepare & present an interim financial report, it should comply with this Standard. Level – I Entities: Non – Corporate entities which fall in any one or more of the following Categories, at the end of the relevant accounting period, are classified as Level – I Entities: Entities whose Equity or Debt securities are listed or are in the process of listing on any Stock Exchange, whether in India or outside India. Banks {including co-operative banks}, financial institutions or entities carrying on insurance business. All commercial, industrial & business reporting entities whose turnover exceeds rupees Fifty Crore in the immediately preceding accounting year. All commercial, industrial and business reporting entities having borrowing in excess of rupee ten crore at any time during the immediate preceding accounting year. (v) Holding and Subsidiary entities of any one of the above.

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Level – II Entities: {SMEs} Non corporate entities which are not Level – I entities but fall in any one or more of the following categories are classified as Level – II Entities: All commercial, industries and business reporting entities, whose turnover exceeds rupees Forty lakh but does not exceeds rupees Fifty crore in the immediately preceding accounting year. 2. All commercial, industrial and business reporting entities having borrowings in excess of rupees one crore but not in excess of rupees ten crore at any time during the immediately preceding accounting year. 3. Holding and Subsidiary entities of any one of the above. Level – III Entities: {SMEs} - Non corporate entities which are not covered under Level – I and Level – II are considered as Level – III entities.

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Applicability of Accounting Standards to Level – I : All the 29 Accounting Standards are fully applicable to Level – I entities. Applicability of Accounting Standards to Level – II & III : For the purpose of applicability of accounting standard to Level – II enterprises the case can be divided into 3 categories: Accounting Standards fully applicable. Accounting Standards applicable but relaxation from certain disclosure requirements. Accounting Standards not applicable. Accounting Standard fully applicable - AS-1, AS-2, AS-3, AS-4, AS-5, AS-6, AS-7, AS-8, AS-9 AS-10, AS-11, AS-12, AS-13, AS-14, AS-15, AS-16, AS-22, AS-26, & AS-28. AS-28, “Impairment of Assets” is applicable: - For Level- I entities w.e.f. 1-4-2004. - For Level- II entities w.e.f. 1-4-2006. - For Level- III entities w.e.f. 1-4-2008.

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Accounting Standard applicable but relaxation from certain disclosures requirements -------------- AS-19, AS-20 & AS-29. Accounting Standards not applicable ---------- AS-3, AS-17, AS-18 & AS-24. AS-21, AS-23, AS-25 & AS-27 are not applicable because of existing regulation in India.

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We are to take care of ourselves – that much we can do – and give up attending to others for a time. Let us perfect the means; the end will take care of itself. For the world can be good and pure, only if our lives are good & pure. It is an effect , and we the means. Therefore, let us purify ourselves. Let us make our – Selves perfect. SWAMI VIVEKANANDA