Functions of the
Accounting
Standards
Board of India
Functions
– To determine the areas in which accounting standards need to be developed
– To formulate accounting standards for the purpose of assisting the Council
of ICAI in evolving and establishing accounting standards in India
– To examine how far the relevant International Accounting Standards can be
adopted in the light of conditions and practices prevailing in India
– To review the accounting standards in the context of changed
circumstances at periodic intervals
– To issue guidance notes
– To give clarifications on issues arising therefrom
Procedure For Issuing Accounting
Standards In India
Procedure for Issuing IND AS
Distinction between IND AS and
AS
– MEANING: IND AS are those accounting standards which have been
converged with IFRS. AS are those which are not converged
– Rule: IND AS are notified by the Ministry of Corporate Affairs as Companies(
Indian Accounting Standards)Rules 2015 as amended by the
Notifivation dated 30th March 2016. AS were notified by the Ministry of
Corporate Affaires as Companie(Accounting Standards) Rules 2006 as
amended by the Notification 30th March 2016
– Acceptability of Financial Statements: IND AS : Financial statements based
on IND AS are universally acceptable. FS based on AS may not be
universally acceptable
Distinction …..
– Principal based vs Rule based: IND AS: are principal based. For ex., under
IND AS, preference shares are treated as loan as they carry a fixed rate of
dividend. Further they are redeemable after the expiry of specified time. In
general maturity period is 20 yrs , in case of infrastructure projects it cant
exceed 30 yrs. No indefinite period. As compared to this AS are rule based.
– Fair value and Historical cost: As per IND AS , asses are to be stated at fair
values and for AS assets are to be shown at historical cost
– Substance vs Rule: IND AS: IT FOLLOWS SUBSTANCE OVER FORM, FOR EX.,
POREF SHARES ARE TREATED AS LIABILITY WHEREAS UNDER as per law it
is “share capital”
Distinction…
– Regulation vs Guidance: IND AS: are more regulatory as they use the word
“shall”
– Inventories- cost formula: IND AS: USES ONE COST FORMULA FOR SIMILAR
TYPES OF INVENTORIES whereas AS uses different formulae that
approximates the cost for valuation of even similar inventories
– Reversal of write down of inventories. IND AS goes for revaluation and in
case there is an evidence of increase in net realizable value because of
changed economic circumstances, the amount of write down is reversed to
the amount originally written down so that the new carrying cost is the lower
of the cost and the revised net realizable value. AS -2 DOESNOT PROVIDE
ANY SPECIFIC GUIDANCE FOR REVERSAL
Distinction…
– Statement of Cash Flows- Bank Overdraft and Extraordinary items. : IND AS-7:
h As per IND AS -7 , bank overdrafts are included as cash and cash
equivalent if they form an integral part of an entity’s cash management.
Under AS-3: Bank overdrafts are usually considered as financing activities.
Extraordinary items are classified as arising from operating, investing, and
financing activities as the case may be.
– Financial Instruments- dividend/interest
– Intangible Assets-Measurement
IND AS-38: Intangible assets can be measured at either cost or revalued
amounts. AS-26: Intangible assets are measured at cost
