Telecommunication Accounts and Finance -6

 

Accounting Standards

 

 

Accounting Standards:

If accounts is the language of business, Accounting Standards may be stated to be the

grammar of that language. These established standards that are mandatorily to be

complied with to ensure that financial statements are prepared in accordance with the

generally accepted accounting practices and that auditors carry out their audits also

accordingly. Accounting standards provide for appropriate disclosure norms to add

value to the preparation of accounting statements.

The need for accounting standards flows directly from the objectives of financial

statements and reporting. Accounting standards address the core issue of information

needs of the stakeholders in a business. Accounting standards are also an effective

way of ensuring managements’ compliance to ethics, consistency and business

transparency. It is also important to note that the Accounting Standards are

supplementary to the laws of the land and do not substitute their provisions in any

manner.

Accounting Standards are therefore

• Guidelines to direct as to how the items which go to make up the financial

statements should be dealt with in Accounts and presented in the Annual

Accounts

• Norms of Accounting Policies and practices by way of codes i.e., codification

of Generally accepted Accounting principles

• Provides a structural framework within which credible financial statements

can be produced

Objectives of Accounting Standards

• Brings about uniformity in financial reporting

• Ensures consistency and comparability in the data published by the enterprises

• Consequently enhances the Quality and the degree of dependability of the

financial statements

Significance of Accounting Standards

 

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• Useful to investors assessing the yield and risk of alternative investments

• Will raise the standards of the audit in its task or reporting on the financial

statements

• Meaningfulness of the numbers in the accounting reports for the purpose of

economic planning, market analysis etc,

• Confidence that user groups have in the fairness and reliability of the financial

statements

Accounts to comply with Accounting Standards

The Companies (Amendment) Act, 1999 has prescribed this requirement by amending

Section 211 that every profit and loss accounts and balance sheet shall comply with

accounting standards. It is further provided by the amendment that if there is any

deviation from the prescribed standards, the annual accounts shall state:

1. The fact that there has been a deviation,

2. The reason for such deviation, and

3. The financial implication of the deviation.

is further provided by the amendment that for the purposes of this section ‘Accounting

Standards’ means such standards of accounting recommended by the Institute of

Chartered Accountants of India as may be prescribed by the Central Government in

consultation with the National Advisory Committee on Accounting Standards.

List of Accounting Standards

• Disclosure of Accounting Policies (AS-1)

• Valuation of Inventories (AS-2)

• Cash Flow Statements (AS-3)

• Contingencies and Event occurring after the Balance Sheet Date

• Net Profit or Loss for the Period, Prior Period Items and Changes in the

Accounting Policies (AS-5)

• Depreciation Accounting (AS-6)

• Construction Contacts (AS-7) Revised

• Accounting for Research and Development (AS-8)

• Revenue Recognition (AS-9)

• Accounting for Fixed Assets (AS-10)

• Accounting for the effect of changes in foreign exchange rates (AS-11)

• Accounting for Government Grants (AS-12)

• Accounting for Investments (AS-13)

• Accounting for Amalgamations (AS-14)

• Accounting for Employee Benefits (AS-15)

• Borrowing Costs (AS-16)

• Segment Reporting (AS-17)

• Related Party Disclosures (AS-18)

• Leases (AS-19)

• Earning Per Share (AS-20)

• Consolidated Financial Statements (AS-21)

• Accounting for Taxes on Income (AS-22)

• Accounting for Investments in Associates in Consolidated Financial

Statements

• (AS-23)

• Discontinuing Operations (AS-24)

• Interim Financial Reporting (AS-25)

• Intangible Assets (AS-26)

• Financial Reporting of Interest in Joint Ventures (AS-27)

• Impairment of Assets (AS-28)

• Provisions Contingent Liabilities and Contingent Assets (AS-29)