Accounting Standards

OBJECTIVES AND FUNCTIONS OF THE ACCOUNTING STANDARDS BOARD

1. The following are the objectives of the Accounting Standards Board:

(i) To conceive of and suggest areas in which Accounting Standards need to be

developed.

(ii) To formulate Accounting Standards with a view to assisting the Council of

the ICAI in evolving and establishing Accounting Standards in India.

(iii) To examine how far the relevant International Accounting

Standard/International Financial Reporting Standard (see paragraph 3 below)
can be adapted while formulating the Accounting Standard and to adapt the
same.

(iv) To review, at regular intervals, the Accounting Standards from the point of
view of acceptance or changed conditions, and, if necessary, revise the same.

(v) To provide, from time to time, interpretations and guidance on Accounting

Standards.

(vi) To carry out such other functions relating to Accounting Standards.

2. The main function of the ASB is to formulate Accounting Standards so that such
standards may be established by the ICAI in India. While formulating the
Accounting Standards, the ASB will take into consideration the applicable laws,
customs, usages and business environment prevailing in India.

3. The ICAI, being a full-fledged member of the International Federation of

Accountants (IFAC), is expected, inter alia, to actively promote the International
Accounting Standards Board’s (IASB) pronouncements in the country with a
view to facilitate global harmonisation of accounting standards. Accordingly,
 while formulating the Accounting Standards, the ASB will give due consideration
to International Accounting Standards (IASs) issued by the International
Accounting Standards Committee (predecessor body to IASB) or International
Financial Reporting Standards (IFRSs) issued by the IASB, as the case may be,
and try to integrate them, to the extent possible, in the light of the conditions and
practices prevailing in India.

4. The Accounting Standards are issued under the authority of the Council of the
ICAI. The ASB has also been entrusted with the responsibility of propagating
the Accounting Standards and of persuading the concerned parties to adopt
them in the preparation and presentation of financial statements. The ASB will
provide interpretations and guidance on issues arising from Accounting
Standards. The ASB will also review the Accounting Standards at periodical
intervals and, if necessary, revise the same.

COMPOSITION OF THE ACCOUNTING STANDARDS BOARD

(for the period from 05-2-2007 to 04-2-2008)

Elected Members of the Council of ICAI on the Accounting Standards Board:

CA. Amarjit Chopra, Chairman New Delhi

Shri Pankaj I. Jain, Vice-Chairman Mumbai

CA. Sunil H. Talati, President Ahmedabad

(Ex-officio)

CA. Ved Kumar Jain, Vice-President New Delhi

(Ex-officio)

CA. Rajkumar S. Adukia Mumbai

CA. Sanjeev K. Maheshwari Mumbai

CA. Mahesh P. Sarda Jamnagar

CA. S. Gopalakrishnan Hyderabad

CA. S. Santhanakrishnan Chennai

CA. Abhijit Bandopadhyay Kolkata

CA. Manoj Fadnis Indore

CA. Harinderjit Singh New Delhi

Nominees of the Central Government on the Council of ICAI on the

Accounting Standards Board:

Shri Jitesh Khosla, Ministry of Company Affairs

Joint Secretary, New Delhi

Shri A.K. Awasthi, Director General Office of the Comptroller and Auditor
(Commercial), New Delhi General of India

Shri R. Sekar, Joint Secretary (TRU-II), Central Board of Excise and Customs
New Delhi

Co-opted Members/Special Invitees

CA. Rahul Roy, Kolkata Federation of Indian Chambers of

Commerce & Industry (FICCI)

CA. Manish Dawar, Gurgaon Associated Chambers of Commerce

&Industry (ASSOCHAM)

CA. Sanjay Grover, New Delhi Institute of Company Secretaries of India

(ICSI)

CA. A.N. Raman, Chennai Institute of Cost and Works Accountants

of India (ICWAI)

CA. P.R. Ramesh, Hyderabad Co-opted by the ICAI

Shri P.R. Ravi Mohan, Mumbai Reserve Bank of India (RBI)

CA. Uday Phadke, Mumbai Confederation of Indian Industry (CII)

CA. P. Sitaram, Mumbai Industrial Development Bank of India

(IDBI)

Dr. Vijay Gupta, Indore Indian Institute of Management (IIM),

Indore

Nomination Awaited Securities and Exchange Board of India

(SEBI)
Smt. Sonali Singh, New Delhi Office of the Controller General of
Accounts (CGA)

Nomination Awaited. University Grants Commission

Ms. Mamta Suri, Hyderabad Insurance Regulatory and Development

Authority (IRDA)

Shi B.D. Vishnoi, New Delhi Central Board of Direct Taxes

CA. Atul Chunilal Bheda, Mumbai Chairman, Expert Advisory Committee of

ICAI

CA. Shanti Lal Daga, Hyderabad Chairman, Research Committee of ICAI

Dr. Avinash Chander, Technical Director Secretary to the Board

RECENT SIGNIFICANT ACHIEVEMENTS

Released

 Release of Compendium of Accounting Standards (ASs) as on July 1, 2006,

covering ASs 1-29 and Accounting Standards Interpretations (ASIs) and
Announcements on accounting aspects issued up to that date along with
CD.
 Revision of Accounting Standards Interpretation (ASI) 14, Disclosure of
Revenue from Sales Transactions (Re.: AS 9, Revenue Recognition).
 Issuance of Guidance Note on Recognition of Revenue by Real Estate
Developers

Announcements issued

 Applicability Date of Announcement on ‘Accounting for exchange

differences arising on a forward exchange contract entered into to hedge
the foreign currency risk of a firm commitment or a highly probable forecast
transaction’ .
 Deferment of Applicability of Announcement on ‘Accounting for exchange
differences arising on a forward exchange contract entered into to hedge
the foreign currency risk of a firm commitment or a highly probable forecast
 transaction’.

Exposure Drafts Issued

 Revised Accounting Standard (AS) 10, Tangible Fixed Assets.

 Proposed Accounting Standard (AS) 30, Financial Instruments: Recognition
and Measurement.
 Proposed Accounting Standard (AS) 31, Financial Instruments:
Presentation.
Consequent to above proposed Accounting Standards, Exposure Drafts of
the Limited Revisions to the following Accounting Standards have been
issued.
 Accounting Standard (AS) 2 (revised 1999), Valuation of Inventories.
 Accounting Standard (AS) 11 (revised 2003), The Effects of Changes in
Foreign Exchange Rates.
 Accounting Standard (AS) 21 (issued 2001), Consolidated Financial
Statements and Accounting for Investments in Subsidiaries in Separate
Financial Statements.
 Accounting Standard (AS) 23 (issued 2001), Accounting for Investments in
Associates.
 Accounting Standard (AS) 26 (issued 2002), Intangible Assets.
 Accounting Standard (AS) 27 (issued 2002), Financial Reporting of
Interests in Joint Ventures.
 Accounting Standard (AS) 28 (issued 2002), Impairment of Assets.
 Accounting Standard (AS) 29 (issued 2003), Provisions, Contingent
Liabilities and Contingent Assets.

Submission of comments to International Accounting Standards Board

(IASB)

 Exposure Draft of proposed IFRS on Operating Segments.

 Discussion paper on Management Commentary
 Exposure Draft of proposed amendments to IAS 32, Financial Instruments;
Presentation
  Exposure Draft of proposed amendments to IAS 1, Presentation of
Financial Statements
 Proposed amendments to IAS 16, Borrowing Costs.

Submission of comments to the RBI

 Draft revised Guidelines regarding ‘Classification and Valuation of

Investments’.

INITIATIVES

Finalisation of the drafts of proposed/revised Accounting Standards for

public exposure

 Revised Accounting Standard (AS) 1, Presentation of Financial Statements.

 Revised Accounting Standard (AS) 5, Net Profit or Loss for the Period, Prior
Period Items and Changes in Accounting Policies.
Consequent to above revised Accounting Standards, Limited Revisions to
the following Accounting Standards are being proposed:
 Accounting Standard (AS) 3 (revised 1997), Cash Flow Statements.
 Accounting Standard (AS) 17 (Issued 2000), Segment Reporting.
 Accounting Standard (AS) 20 (Issued 2001), Earnings Per Share.
 Accounting Standard (AS) 23 (Issued 2001), Accounting for
Investments in Associates.
 Accounting Standard (AS) 25 (Issued 2002), Interim Financial
Reporting.

Finalisation of the drafts of proposed/revised Accounting Standards for

circulation among the Institute’s Council Members and specified outside
bodies (limited exposure)

 Revised accounting Standard (AS) 12, Accounting for Government Grants

and Disclosure of Government Assistance
 Proposed Accounting Standard on Non-Current Assets Held for Sale and
Discontinued Operations (corresponding to IFRS 5)

Subjects on which new Accounting Standards are under preparation

  Financial Instruments: Disclosures (corresponding to IFRS 7)
 Share-based Payment (corresponding to IFRS 2)
 Insurance Contracts (corresponding to IFRS 4)
 Agriculture (corresponding to IAS 41)
 Accounting and Reporting by Retirement Benefit Plans (corresponding to
IAS 26)
 Investment Property (corresponding to IAS 40)

Accounting Standards under revision

 Accounting Standard (AS) 4, Events After the Balance Sheet Date

 Accounting Standard (AS) 9, Revenue Recognition
 Accounting Standard (AS) 14, Accounting for Amalgamations

Other project in pipeline

 Revision of ‘Guidance Note on Terms Used in the Financial Statements’

 Constitution of Task Force for preparation of a paper on accounting for
entities subject to tariff fixation such as electricity companies, to be
considered by the National Standards-Setters.
 Constitution of Task Force for preparation of a Concept Paper on the issue
of convergence with the International Accounting Standards (IASs)/
International Financial Reporting Standards (IFRSs).

DETAILS OF PROJECTS IN PROGRESS ACCOUNTING STANDARDS BOARD

I. Formulation of New Accounting Standards

1. Financial Instruments: Disclosures (corresponding to IFRS 7)
2. Share-based Payment (corresponding to IFRS 2)
3. Insurance Contracts (corresponding to IFRS 4)
4. Agriculture (corresponding to IAS 41)
5. Accounting and Reporting by Retirement Benefit Plans (corresponding
to IAS 26)
6. Investment Property (corresponding to IAS 40)
7. Non-Current Assets Held for Sale and Discontinued Operations
 (corresponding to IFRS 5)

II. Accounting Standards under revision

1. Accounting Standard (AS) 1, Disclosure of Accounting Policies (revised
Standard to be titled as Presentation of Financial Statements)
2. Accounting Standard (AS) 4, Contingencies and Events Occurring After
the Balance Sheet Date (revised Standard to be titled as Events
Occurring After the Balance Sheet Date)
3. Accounting Standard (AS) 5, Net Profit or Loss for the Period, Prior
Period Items and Changes in Accounting Policies (revised Standard to
be titled as Accounting Policies, Changes in Accounting Estimates and
Errors)
4. Accounting Standard (AS) 9, Revenue Recognition
5. Accounting Standard (AS) 14, Accounting for Amalgamations
6. Accounting Standard (AS) 12, Accounting for Government Grants
(revised Standard to be titled as Accounting for Government Grants and
Disclosure of Government Assistance)
7. Accounting Standard (AS) 10, Accounting for Fixed Assets (revised
Standard to be titled as Property, Plant and Equipment)

III. Other Projects

1. Revision of Guidance Note on Terms used in Financial Statements
2. Constitution of Task Force for preparation of an approach paper on
Accounting for Tariff Regulated Entities such as electricity companies, to
be considered by the National Standards-Setters, further to be
considered by IASB.
3. Constitution of Task Force for preparation of a Concept Paper on the
issue of convergence with the International Accounting Standards
(IASs)/ International Financial Reporting Standards (IFRSs).
National Advisory Committee on Accounting Standards
National Advisory Committee on Accounting Standards (NACAS) is a body
set up under section 210A of the Companies Act, 1956 by the Government of
India. It advises the Central Government on the formulation and laying down
of accounting policy and accounting standards for adoption by companies
.[1] The advisory committee shall consist of the following members, namely:
1. A chairperson who shall be a person of eminence well versed in
accountancy, finance, business administration, business law, economics or
similar Discipline;
2. One member each nominated by The Institute of Chartered Accountants of
India constituted under the Chartered Accountants Act, 1949, The Institute of
Cost and Work Accountants Act, 1959 and The Institute of Company
Secretaries of India constituted under the Company secretaries Act 1980.
3. One representative each of the Central government, Reserve Bank of India,
Comptroller & Auditor General of India to be nominated by it.
4. A person who holds or has held the office of professor in Accountancy,
Finance or Business Management in any University or deemed university;
5. The Chairman of the Central Board of Direct Tax (India) constituted under
the Central Board of Revenue Act, 1963 (India) or his nominee;
6. Two members to represent the chambers of commerce and industry to be
nominated by The Central Government of India; and
7. One representative of the Security and Exchange Board of India to be
nominated by it.
Further, Institute of Chartered Accountants of India (ICAI) has the responsibility
of preparing the accounting standards and recommend them to NACAS
CA.Amarjit Chopra is the current chairman of NACAS. He is a past president
of Institute of Chartered Accountants of India, (ICAI). CA. M M Chitale and CA
Y H Malegam have been Chairmen of NACAS in the past.[2]
Constitution of National Advisory Committee on Accounting Standards.

(1) The Central Government may, by notification in the Official Gazette, constitute an
Advisory Committee to be called the National Advisory Committee on Accounting
Standards (hereafter in this section referred to as the "Advisory Committee") to advise
the Central Government on the formulation and laying down of accounting policies and
accounting standards for adoption by companies or class of companies under this Act.

(2) The Advisory Committee shall consist of the following members, namely :-

(a) a Chairperson who shall be a person of eminence and well versed in

accountancy, finance, business administration, business law, economics or
similar discipline;

(b) One member each nominated by the Institute of Chartered Accountants of

India constituted under the Chartered Accountants Act, 1949(38 of 1949), the
Institute of Cost and Works Accountants of India constituted under the Cost
and Works Accountants Act, 1959 (23 of 1959) and the Institute of Company
Secretaries of India constituted under the Company Secretaries Act, 1980 (56
of 1980);

(c) One representative of the Central Government to be nominated by it;

(d) One representative of the Reserve Bank of India to be nominated by it;

(e) One representative of the Comptroller and Auditor-General of India to be

nominated by him;

(f) A person who holds or has held the office of professor in accountancy,
finance or business management in any university or deemed university;

(g) The Chairman of the Central Board of Direct Taxes constituted under the
Central Boards of Revenue Act, 1963 (54 of 1963) or his nominee;

(h) Two members to represent the chambers of commerce and industry to be

nominated by the Central Government; and

(i) One representative of the Securities and Exchange Board of India to be

nominated by it.

(3) The Advisory Committee shall give its recommendations to the Central Government
on such matters of accounting policies and standards and auditing as may be referred
to it for advice from time to time.

(4) The members of the Advisory Committee shall hold office for such terms as may be
determined by the Central Government at the time of their appointment and any
vacancy in the membership in the Committee shall be filled by the Central Government
in the same manner as the member whose vacancy occurred was filled.

(5) The non-official members of the Advisory Committee shall be entitled to such fees,
traveling, conveyance and other allowances as are admissible to the officers of the
Central Government of the highest rank.