Accounting Standards & IFRS

  • Accounting Standards are written statements of uniform accountingrules and guidelines or practices relating to measurement, valuation and disclosure.
  • Accounting standards are developed by the Accounting Standards Board constituted by the Institute of Chartered Accountantsof India. These standards bring uniformity in accounting practices to ensure transparency, consistency and comparability in accounting policies.
  • Accounting Standards help in disclosing important information beyond that required by law.
  • Objectives of AS are dictate the manner in which financial statements should be prepared, they harmonies diverse accounting policies and practices to ensure uniformity in presentation of financial statements, they create a sense of confidence among the users of financial information, etc.
  • Advantages of accounting standards are that they improve the reliability and credibility of financial statements,help accountants to follow uniform practices, etc.
  • There are 32 Accounting Standards, compliance of most of which ismandatory for companies.
  • International Financial Reporting Standards is a set of accounting standards explaining how different types of business transactions and events should be reported in the financial statements.
  • The main aim of IFRS is to make international comparisons as easy as possible. There is a need for IFRS as enterprises are carrying on businesses worldwide.
  • The financial statements prepared under IFRS are statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flow, notes and significant accounting policies.
  • The underlying assumptions in IFRS are Accrual Assumption, Going Concern Assumption, Measuring Unit Assumption and Constant Purchasing Power Assumption.
  • IFRS is beneficial for investors investing globally, business industry etc.
  • They are principle based while Indian GAAP is rule based. IFRS was made mandatory in India for financial statements for the periods beginning on or after 1st April 2011.

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