nature and objective of accounting standard

1. FINANCIAL REPORTING

2. Module 1
• Financial statements
– Objectives
– Uses of financial statement
• Accounting standards
– Concept and Nature
– Objectives
• List of Accounting Standards

3. FINANCIAL STATEMENTS
• Financial statements are the statements showing the
financial position and results of business operation at
the end of the accounting period.
• Traditional statements are balance sheet and profit
and loss account.

4. Financial Statements
A financial statement (or financial report) is a formal
record of the financial activities and position of a
business, person, or other entity. Relevant financial
information is presented in a structured manner and
in a form easy to understand.
• Balance sheet
• Income statement
• Statement of changes in equity, also known as
equity statement or statement of retained
earnings
• Cash flow statement

5. Objectives of preparing financial
statements
1. To show the position of asset or liabilities
2. To provide various information to various
stakeholders
3. To present true and fair view of the business
4. To forecast earning capacity of the business
5. To assess credit worthiness of the business
6. To decide about future of the business

6. Uses of financial statement
• To owners of an entity
• To management
• To suppliers and creditors
• To customers
• To financial institutions
• To employees and trade unions
• To Government and other agencies
• To public

7. Accounting Standards
• Accounting standards are the written statements consisting of
rules and guidelines, issued by the accounting institutions, for
the preparation of uniform and consistent financial
statements and also for other disclosures affecting the
different users of accounting information.
• Accounting standards lay down the terms and conditions of
accounting policies and practices by way of codes, guidelines
and adjustments for making the interpretation of the items
appearing in the financial statements easy and even their
treatment in the books of account.

8. Nature of Accounting Standards
1. Serve as a guide to the accountants
2. Act as a dictator
3. Serve as a service provider
4. Act as a harmonizer

9. Objectives of Accounting Standards
1. For bringing uniformity in accounting
methods
2. For improving the reliability of the financial
statements
3. Simplify the accounting information
4. Prevents frauds and manipulations
5. Helps auditors

10. • Set of accounting standards notified by the Ministry of Corporate
Affairs which are converged with International Financial Reporting
Standards (IFRS).
• These accounting standards are formulated by Accounting
Standards Board of Institute of Chartered Accountants of India.
• Now India will have two sets of accounting standards viz. existing
accounting standards under Companies (Accounting Standard)
Rules, 2006 and IFRS converged Indian Accounting Standards (Ind
AS).
• The Ind AS are named and numbered in the same way as the
corresponding IFRS.
• Basically, the Accounting standards of the ICAI are to ensure that
accounts are prepared uniformly and in line with the Indian GAAPs
for better understanding of the users.

11. Mandatory Accounting Standards (AS)
of the ICAI, w.e.f. 1st Sep. 2014 onwards:
• AS 1 Disclosure of Accounting Policies
• AS 2 Valuation of Inventories
• AS 3 Cash Flow Statements
• AS 4 Contingencies and Events Occurring
after the Balance Sheet Date
• AS 5 Net Profit or Loss for the
period,Prior Period Items and Changes in
Accounting Policies
• AS 6 Depreciation Accounting
• AS 7 Construction Contracts (revised
2002)
• AS 9 Revenue Recognition
• AS 10 Accounting for Fixed Assets
• AS 11 The Effects of Changes in Foreign
Exchange Rates (revised 2003)
• AS 12 Accounting for Government
Grants
• AS 13 Accounting for Investments
• AS 14 Accounting for Amalgamations
• AS 15 Employee Benefits (revised 2005)
• AS 16 Borrowing Costs
• AS 17 Segment Reporting
• AS 18 Related Party Disclosures
• AS 19 Leases
• AS 20 Earnings Per Share
• AS 21 Consolidated Financial Statements
• AS 22 Accounting for Taxes on Income
• 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 Ventures
• AS 28 Impairment of Assets