2. To standardize accounting methods and
procedures.
To lay down principles for preparation and
presentation.
To establish benchmark for evaluating the
quality of financial statements prepared by
the enterprise.
To ensure the users of financial statements
get creditable financial information.
To attain international levels in the related
areas
3. Accounting Standards and The Companies Act,
1956
Section 211 sub sections (3 A), (3 B) and (3 C)
inserted by the Companies Amendment Act,
1999 w.e.f. 31.10.1998:
(3A) every P & L Account and Balance Sheet shall
comply with accounting standards,
(3 B) deviations, if any, to be disclosed with
reasons and financial effect of deviation,
(3 C) "accounting standards" means standards of
accounting recommended by ICAI or as may be
prescribed by Central Govt. in consultation with
National Advisory Committee on Accounting
Standards.
4. Section 217 sub section (2AA) inserted by the Companies
Amendment Act, 2000 w.e.f. 13.12.2000:
(2AA) The Board's report shall also include a Directors'
Responsibility Statement indicating therein (1) that in
preparation of annual accounts, the applicable accounting
standards had been followed along with proper
explanation relating to material departure.
Section 227 sub section (3)(d) inserted by the Finance Act,
1999 w.e.f. 31.10.1998:
(3)(d) the auditor's report shall also state whether, in his
opinion, the P & L Account and the Balance Sheet comply
with accounting standards referred in section 211 (3C),
(4) where answer to (3)(d) is negative or with qualification,
it shall also state the reasons thereof.
5. AS-1 DISCLOSURE OF ACCOUNTING POLICIES
AS-2 VALUATION OF INVENTORIES
AS-3 CASH FLOW STATEMENTS
AS-4 CONTINGECIES AND EVENTS OCCURING
AFTER THE BALANCE SHEET DATE
AS-5 NET PROFIT OR LOSS FOR THE PERIOD,
PRIOR PERIOD ITEMS AND CHANGES IN
ACCOUNTING POLICIES
6. AS-6 DEPRECIATION ACCOUNTING
AS-7 ACCOUNTING FOR CONSTRUCTION
CONTRACTS
AS-8 ACCOUNTING FOR RESEARCH AND
DEVELOPMENT
AS-9 REVENUE RECOGNITION
AS-10 ACCOUNTING FOR FIXED ASSETS
7. AS-11 ACCOUNTING FOR THE EFFECTS OF
CHANGES IN FOREIGN EXCHANGE RATES
AS-12 ACCOUNTING FOR GOVERNMENT
GRANTS
AS-13 ACCOUNTING FOR INVESTMENTS
AS-14 ACCOUNTING FOR AMALGAMATIONS
AS-15 ACCOUNTING FOR RETIREMENT
BENEFITS IN THE FINANCIAL STATEMENTS OF
EMPLOYERS
AS-16 BORROWING COSTS
8. AS - 17 SEGMENT REPORTING
AS - 18 RELATED PARTY DISCLOSURES
AS - 19 LEASES
AS - 20 EARNING PER SHARE
AS - 21 CONSOLIDATED FINANCIAL
STATEMENTS
AS - 22 ACCOUNTING FOR TAXES ON INCOME
9. AS - 23 ACCOUNTING FOR INVESTMENTS IN
ASSOCIATES IN CONSOLIDATED FINANCIAL
STATEMENTS
AS - 24 DISCONTINUING OPERATIONS
AS - 25 INTERIM FINANCIAL REPORTING
AS - 26 INTANGIBLE ASSETS
AS - 27 FINANCIAL REPORTING OF INTERESTS
IN JOINT VENTURE
10. AS – 28 IMPAIRMENT OF ASSETS
AS – 29 PROVISIONS, CONTINGENT LIABILITIES
AND CONTINGENT ASSETS
AS – 30 FINANCIAL
INSTRUMENTS:RECOGNITION AND
MEASUREMENT
AS – 31 FINANCIAL
INSTRUMENTS:PRESENTATION
AS – 32 FINANCIAL INSTRUMENTS:DISCLOSURES
11. Objective
Statements are presented by a parent
(holding enterprise ) -
to provide financial information about the
economic activities of its group
to show economic resources controlled, the
obligations of and results achieved by the
group.
Accounting Standard lays down principles and
procedures for preparation and presentation
of consolidated financial statements
12. Should be applied in the preparation and
presentation of consolidated financial statements for
a group of enterprises under the control of a parent.
Should also be applied in accounting for investments
in subsidiaries in a separate financial statements of a
parent.
Does not deal with methods of accounting for
amalgamations, accounting for investments in
associates and joint ventures
13. A parent which presents consolidated statements
should :
Present these statements in addition to its
separate financial statements.
Consolidate all subsidiaries, domestic as well as
foreign.
A subsidiary should be excluded when control is
temporary or when it operates under severe long
term restriction.
Disclose the reason for not including the
subsidiary
14. A subsidiary is an enterprises that is controlled
by another enterprise known as the parent.
A group is a parent and its subsidiaries.
Control means the ownership of more than half
of the voting power of an enterprise or control of
the composition of BOD so as to obtain economic
benefits from its activities
Consolidated Financial Statements are the
financial statements of a group presented as
those of a single enterprise.
15. To be combined on line to line basis.
Cost to the parent of its investment in each
subsidiary and the parent's portion of equity of
each subsidiary to be eliminated,
The excess or deficiency to be treated as
Goodwill / Capital Reserve
Intra group balances, intra group transactions
and resulting unrealized profits and losses to be
eliminated in full (unrealized losses should not
be eliminated if cost cannot be recovered)
16. The financial statements should be drawn up to the
same reporting date. If not practicable, difference
should not be more than six months.
Minority interest in net income of the consolidated
subsidiary to be adjusted against the group income
Minority interest in net assets to be presented
separately from liabilities and the equity of the
parent's shareholders.
If minority's share of loss exceeds the minority
interest in the equity of the subsidiary, such excess is
to be adjusted against majority interest.
17. Subsequently, in case of profits in future, all
such profits are allocated to the majority
interest, unless previous losses absorbed by
the majority are recovered.
Parent's share of profits in subsidiary, should
be adjusted for Preference Dividend, whether
declared or not on Preference Shares of
subsidiary held outside the group.
18. On disposal of subsidiary, the difference
between proceeds from disposal and carrying
amount of net assets is treated as profit /
loss on disposal in consolidated financial
statements.
Investment to be recorded as per AS-13 in
individual financial statement of parent from
the date it ceases to be a subsidiary
19. List of all subsidiaries including name, country of
incorporation, proportion of ownership interest and
voting power held.
Nature of relationship between the parent and a
subsidiary, if the parent does not own more than half
of the voting power of the subsidiary.
Effect of the acquisition or disposal of subsidiaries on
the financial position at the reporting date.
Name of the subsidiaries of which reporting dates are
different from that of parent's and the difference in
reporting dates.
20. If it is not practicable to use uniform accounting
policies, the fact together with the proportion of
such items in consolidated financial statements
to which different accounting policies apply
should be disclosed.
If a member uses different accounting policies,
for reasons other than those stated above,
appropriate adjustments should be made in
consolidated financial statements.
