Accounting bodies throughout the world are striving to achieve a reasonable degree of uniformity in the accounting policies by prescribing certain Accounting Standards. Accounting bodies of most of the countries, including ICAI are the members of this body and these members have resolved to conform to the standards developed by IASC. Globalization of the economy has led to Indian companies expanding their operations across the borders and this calls for uniformity in accounts of their facilities located in different countries. Foreign investors would give more weightage to the accounts of those companies which are
Accounting bodies throughout the world are striving to achieve a reasonable degree of uniformity in the accounting policies by prescribing certain Accounting Standards. Accounting bodies of most of the countries, including ICAI are the members of this body and these members have resolved to conform to the standards developed by IASC. Globalization of the economy has led to Indian companies expanding their operations across the borders and this calls for uniformity in accounts of their facilities located in different countries. Foreign investors would give more weightage to the accounts of those companies which are
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Accounting bodies throughout the world are striving to achieve a reasonable degree of uniformity in the accounting policies by prescribing certain Accounting Standards. Accounting bodies of most of the countries, including ICAI are the members of this body and these members have resolved to conform to the standards developed by IASC. Globalization of the economy has led to Indian companies expanding their operations across the borders and this calls for uniformity in accounts of their facilities located in different countries. Foreign investors would give more weightage to the accounts of those companies which are
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
PROF. MOBIN SHAIKH SCHOOL OF MANAGEMENT SUMANDEEP VIDYAPEETH UNIVERSITY | | |
O The term standard denotes a
discipline, which provides both guidelines and yardstick for evaluation.. As guidelines, they evaluation provide uniform practices and common techniques. techniques. | | |
O Accounting bodies throughout the
world are striving to achieve a
reasonable degree of uniformity in the accounting policies by prescribing certain accounting standards with respect to collection and presentation of accounting information | | |
O To formulate the accounting standards, they established a committee called the international accounting standards committee (IASC) in 1973. 1973. O Accounting bodies of most of the countries, including Institute of Chartered Accountants of India ( ICAI ) are the members of this body and these members have resolved to conform to the standards developed by IASC
O Formulating , publishing, and promoting the use of the accounting standards world wide.. wide O To work for improvement and harmonization of regulating accounting standards and procedures relating to financial statements
| O Globalization of the economy has led to Indian companies expanding their operations across the borders and this calls for uniformity in accounts of their facilities located in different countries. countries. O Foreign investors would give more weight -age to the accounts of those companies which are based on IAS |
|! O Recognizing the need to harmonize the diverse accounting polices and practices prevalent in India , the ICAI constituted ASB on April 21st 1977.. the standards are intended to apply only to 1977 items which are material. material. Also the A.S cannot and do not override the local regulations which govern the preparation and presentation of financial statements in our country |
O In case the company does not conform to any of the mandatory accounting standards, the auditor will have to qualify his report by justifying his deviation. deviation. In case he fails to do so the ICAI can take disciplinary action against him on the ground of professional misconduct ! |
O The accounting standards board has in line with the international standards, issued twenty nine standards to be followed by its members, while auditing the accounts of companies companies.. The important standards discussed in our course book
" O Methods of Depreciation, Depletion and Amortization. O Valuation of Inventories O Treatment of Good will O Valuation of Investments O Treatment of Retirement Benefits O Valuation of Fixed Assets O Treatment of Contingent Liabilities the above list of differing accounting polices are not exhaustive . |##$ | $%% "
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" O To ensure proper understanding of financial statements, it is necessary that all significant accounting policies adopted in the preparation and presentation of financial statements should be disclosed. disclosed. |##$ | $%% "
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" O Any change in an accounting policy which has a material effect on current and future periods should be disclosed. O For this purpose, the major considerations governing the selection and application of accounting policies are: O Prudence O Substance over form O Materiality. |##$ | $%% "
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" O : in view of the uncertainty attached Ô : to future events, profits are not anticipated but recognized only when realized though not necessarily in cash. cash. Provision is made for all known liabilities and losses even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information |##$ | $%% "
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" O ÷
: the accounting
: treatment and presentation in financial statements of transactions and events should be governed by their substance and not merely by the legal form |##$ | $%% "
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" O : financial statements should 2 : disclose all ³material´ items, i.e. items the knowledge of which might influence the decisions of the user of the financial statements.. statements |##$ | $%% "
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" O If the fundamental accounting assumption like
are followed in financial statements, specific disclosure is not required. required. O If a fundamental accounting assumption is not followed , the fact should be disclosed
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O Realizing the importance of accounting
standards, the companies amendment act,1999 act, 1999 has inserted sub- sub- sec(3 sec( 3A),(3 A),(3B),( B),(33C) in the section 311, 311, which provides that every company has to follow the accounting standards as issued by the ICAI |##$ | $%% "
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" O Since the accounting polices adopted could vastly differ from company to company and even year to year in respect of the same company, AS- AS-1, by forcing the disclosure of accounting policies ensures that the users of the financial statements would be able to do a meaningful comparison of such statements and draw proper conclusion from them |##$ | $%% "
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" O :- to ensure proper understanding of a : financial statements, it is necessary that all significant accounting policies adopted in the preparation and prevention of financial statements should be disclosed. |
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O AS ± 4 deals with the treatment in financial statements of contingencies and events occurring after the balance sheet date. date. O However it
certain contingencies such as liabilities of life assurance and general insurance enterprises arising from the policies issued, obligations under retirement benefit plans, and commitments arising from long term lease contracts in view of special considerations applicable to them |
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O The accounting treatment of a
is determined by the expected outcome of the contingency. If it is likely that a contingency will result in a loss to the enterprise, then it is prudent to provide for that loss in the financial statements. |
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O are not recognized in financial statements since their recognition may result in the recognition of revenue, which may never be realized. O A substantial legal claim against/in favor of the enterprise may represent a contingency. O :- If a reliable estimate of the a : financial effect cannot be made, this fact is disclosed. i
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O Adjustments to assets and liabilities are required for events occurring after the balance sheet date that provide additional information materially affecting the determination of the amounts relating to conditions existing at the balance sheet date. O For example, an adjustment may be made for a loss on a trade receivable account, which is confirmed by the insolvency of a customer, which occurs after the balance sheet date i
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O Adjustments to assets and liabilities are not appropriate for events occurring after the balance sheet date, if such events do not relate to conditions existing at the balance sheet date. O An example is the decline in market value of investments between the balance sheet date on which the financial statements are approved. i
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O There are events , which , although they take place after the balance sheet date, are sometimes reflected, in the financial statements because of statutory requirements or because of their special nature. nature. O Such items include the amount of dividend proposed or declared by the enterprise after the balance sheet date in respect of the period covered by the financial statements i
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O Events occurring after the balance sheet date may indicate that the enterprise ceases to be a going concern. Worsening in operating results and financial position, or unusual changes affecting the existence or substratum of the enterprise after the balance sheet date (e.g., destruction of a major production plant by a fire after the balance sheet date) may indicate a need to consider whether it is proper to use the fundamental accounting assumption of going concern in the preparation of the financial statements i
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O a :- when the events occurring after the balance sheet date are disclosed in the report of the approving authority, the information given comprises the nature of the events and an estimate of their effects or a statement that such an estimate cannot be made. )*
O ³Never be afraid to try, remember... Amateurs built the Ark Professionals built the Titanic´ O "Everything is okay in the end, if it's