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Premium member Presentation Transcript ACCOUNTING STANDARDS : ACCOUNTING STANDARDS Financial Reporting and Regulations: INTRODUCTION TO GAAPPowerPoint Presentation: Generally Accepted Accounting Principles (GAAP) Meaning – Generally Accepted Accounting Principles 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.PowerPoint Presentation: According to the American Institute of Certified Public Accountants (AICPA), the principles which have substantial authoritative support become a part of the generally accepted accounting principles. The general acceptance of the accounting principles or practices depends upon how well they meet the following criteria:PowerPoint Presentation: Relevance – A principle is relevant to the extent it results in information that is meaningful and useful to the user of the accounting information. Objectivity - connotes / signifies reliability and trustworthiness. A principle is objective to the extent the accounting information is not influenced by personal bias or judgement of those who provide it . It also implies verifiability which means that there is some way of ascertaining the correctness of the information reported.PowerPoint Presentation: Feasibility – A principle is feasible /practicable / manageable to the extent it can be implemented without much complexity or cost.BASIC ASSUPTIONS OF ACCOUNTING: BASIC ASSUPTIONS OF ACCOUNTING Foundation pillars on which structure of accounting is based | | | | Accounting Money Accounting Going Entity Measurement Period Concern AssumptionBASIC PRINCIPLES OF ACCOUNTING: BASIC PRINCIPLES OF ACCOUNTING Duality Revenue Historical Matching Principle Recognition Cost Full Disclosure - Financial Statement should act as means of conveying and not concealingMODIFYING PRINCIPLES OF ACCOUNTING: MODIFYING PRINCIPLES OF ACCOUNTING To make the information useful, the basic assumptions and principles have to be modified Cost-Benefit Materiality Consistency Principle Principle Principle Prudence Timeliness Substance over FormACCOUNTING STANDARDS: ACCOUNTING STANDARDS Accounting 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. To formulate the accounting standards, they have established a committee called as the International Accounting Standards Committee (IASC) in 1973.PowerPoint Presentation: Accounting bodies of most of the countries, including the Institute of Chartered Accountants of India, are members of this body and these members have resolved to conform to the standards developed by IASCInternational Accounting Standards: International Accounting Standards To formulate the accounting standards, Accounting Bodies throughout the world established International Accounting Standards Committee (IASC) in 1973. Accounting bodies of most of the countries, including the Institute of Chartered Accountants of India (ICAI), are members of this body.IAS: IAS International Accounting Standards (IAS) have assumed great importance due to – A. 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. B. Foreign Investors give more weightage to accounts based on IAS.List of Standards issued by IASC (page 23 & 24): List of Standards issued by IASC (page 23 & 24) IAS 1 Presentation of Financial Statements IAS 2 Inventories IAS 3 Cash Flow Statements IAS 8 Net Profit or Loss for the period, Fundamental Errors and Changes in Accounting Policies IAS10 Events after the Balance Sheet Date IAS 11 Construction ContractsPowerPoint Presentation: IAS 12 Income Taxes IAS 14 Segment Reporting IAS 15 Information Reflecting the Effects of Changing Prices IAS 16 Property, Plant and Equipment IAS 17 Lease IAS 18 Revenue IAS 19 Employee BenefitsIndian Accounting Standards: Indian Accounting Standards To harmonize diverse accounting policies in India, the Institute of Chartered Accountants of India ( ICAI) constituted Accounting Standards Board (ASB) in 1977 ASB, after considering applicable laws, customs, usages and business environment , formulated Accounting Standards.Auditor’s duties in relation to Accounting Standards: Auditor’s duties in relation to Accounting Standards In case the Company does not conform to any mandatory accounting standards and statement of all significant accounting policies adopted in the preparation of Financial Statements, the auditor will have to qualify his report justifying the deviation. If he fails to do so, the ICAI can take disciplinary action against such auditor for professional misconduct. E.g. Satyams’s auditorAccounting Standards (AS) issued by ASB of ICAI: Accounting Standards (AS) issued by ASB of ICAI The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI), has in line with International Standards, issued 29 standards to be followed by its members while auditing the accounts of Companies.List of AS (page 25 & 26): List of AS (page 25 & 26) AS 1 Disclosure of Accounting Policies AS 2 Valuation of Inventories AS 3 Cash Flow Statements AS 4 Contingencies and Events occurring after the Balance Sheet Date AS 5 Net Profit or Loss for the Period, Prior Period and Extraordinary Items and Changes in Accounting PoliciesPowerPoint Presentation: AS 6 Depreciation Accounting AS 7 Construction Contracts AS 8 Accounting for Research & Development AS 9 Revenue Recognition AS 10 Accounting for Fixed Assets AS 11 The Effects of Changes in Foreign Exchange RatePowerPoint Presentation: AS 12 Accounting for Govt Grants AS 13 Accounting for Investments AS 14 Accounting for Amalgamation AS 15 Accounting for Retirement Benefits AS 16 Borrowing Costs AS 17 Segment Reporting AS 18 Related Party Disclosures AS 19 LeaseUS GAAP (page 78 & 79): US GAAP (page 78 & 79) US GAAP established by FASB (Financial Accounting Standard Board and AICPA (American Institute of Certified Public Accountants) The US GAAP has nearly 100 Accounting Standards as compared to 29 in India.Diff between Indian Accounting Standards and US GAAP: 1. Reporting v/s Disclosure 2.Form v/s Sustance 3.Accounting vs Analysis 4.Globalisation vs Localisation Diff between Indian Accounting Standards and US GAAPDifference bet US GAAP and Indian GAAP: Difference bet US GAAP and Indian GAAP 1. Full disclosure 2.Consolidation of Group Company A/ cs 3. Provision for deferred tax liability 4. Disclosure of EPS 5. Disclosure of Related Party Transactions 6.Cash Flow Statement is compulsory You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.