Accounting Standards Notes CA IPCC Group 2

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ACCOUNTING STANDARDS
"Accounting standards are written policy documents, issued by regulatory authority (ICAI), covering the aspects of recognistion, treatment, measurement, presentation & disclosure of transactions &events in the financial statements"
‐ Issued by; ICAI ‐ Institute of Chartered Accountants of India.
‐ Total Number of Accounting Standards issued till date = 32
‐ Total Number of effective/applicable Accounting Standards till date = 28 (AS‐8, AS‐30, AS‐31 & AS‐32 not applicable)

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Purpose/Objective/Benefits of Accounting Standards

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‐ In order to ensure transparency, consistency, comparability, adequacy and reliability of financial statements, it is essential to standardise the accounting principles and policies.
‐ Accounting Standards provide framework & standard accounting policies to be followed by different enterprises under specific circumstances.
‐ It helps in harmonisation of accounting policies & avoid confusion in the accounting treatments.
‐ It eliminate non‐comparibility & improve reliability of financial statements.
‐ It may call for disclosure of important informations, which is not required to be statutorily disclosed.

Limitations of Accounting Standards
a) Alternatives;
b) Rigidity;

Accounting Standards ‐ GR 2nd

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4.

Contingencies and Events occuring after the Balance Sheet date
Net Profit or Loss for the period, Prior period items and Change in Accounting Policies
Accounting for the Effects of Changes in Foreign Exchange Rates
Accounting for Government Grants
Borrowing Cost
Accounting for Leases
Earning per share
Intangible Assets

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AS‐4
AS‐5
AS‐11
AS‐12
AS‐16
AS‐19
AS‐20
AS‐26

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c) Statue;

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Choice between different alternative accounting treatments may become difficult.
There may be a trend toward rigidity i.e. Accounting Stds are not flexible to the fast changing business environment.
Accounting Stds cannot override the statue (law) governing the

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