What Is The Procedure For Issuing Accounting Standards In India

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    2022-12-28T17:45:04+05:30

    What Is The Procedure For Issuing Accounting Standards In India

    India is a country with a lot of growth potential. With a population of over 1.3 billion people, there’s plenty of room for businesses of all sizes to get in on the action. That said, accounting standards can be a bit of a stumbling block for businesses looking to expand into India. In this blog post, we will explore the procedure for issuing accounting standards in India and how you can make sure your business is complying with all the necessary requirements. From understanding Indian GAAP to issuing S-1 filings, read on to learn everything you need to get started in India.

    What Are Accounting Standards?

    One of the primary ways that accounting standards are developed is through the work of the Accounting Standards Development Committee (ASDC). The ASDC is a self-regulating body that establishes accounting principles and practices. The ASDC’s membership includes representatives from various financial institutions, including banks, securities companies, insurance companies, and other organizations with a financial interest in financial reporting.

    The ASDC develops proposed accounting standards by issuing draft proposals to its membership. After receiving feedback from members, the ASDC either amends or withdraws the draft proposal. If the draft proposal is amended, the ASDC then submits a final version to the IFRS Foundation for publication as an IFRS standard. Once published as an IFRS standard, it becomes mandatory for all entities who use IFRS to conform to that standard.

    How Are Accounting Standards Made?

    The Standard-Setting Process in India

    Accounting Standards are issued by the Accounting Standards Committee, an independent body within the Indian Accounting Standards Board. The Committee is appointed by the Board and comprises of experts from various professional bodies and industry. The Committee reviews accounting literature and prepares proposals for new or amended standards. Once the proposal is approved, it is sent to the Board for final approval. Any changes to standards must be adopted by a two-thirds majority vote of members on the Board.

    What Are The Types of Accounting Standards?

    There are various types of accounting standards in existence today. The first and most common type is the Generally Accepted Accounting Principles (GAAP). GAAP sets a set of financial guidelines that companies must adhere to when reporting their financial data. Other types of accounting standards include auditing standards, corporate governance principles, and disclosure standards.

    The issuance of accounting standards can be a contentious process. Many stakeholders—including companies, investors, and regulatory bodies—have a vested interest in ensuring that accounting standards are effective and practical. Consequently, the adoption of certain standards can be difficult and contentious. Stakeholders often clash over which standard should be adopted, how it should be implemented, and whether it is necessary at all.

    Nevertheless, the issuance of accounting standards is an important part of upholding responsible corporate behavior. By setting clear guidelines for how companies must report their finances, accounting standards play an important role in encouraging transparency and accountability in the marketplace.

    The Procedure For Issuing Accounting Standards In India

    The Accounting Standards Board of India (ASB) is a statutory body appointed by the government of India to develop, promulgate and enforce accounting standards in India. The ASB has thirteen members, including representatives from the public sector, industry and academia. The ASB develops and enforces standards that are applicable to private as well as public entities in India. The ASB performs its functions through the issuance of Accounting Standards Notes (ASNs), which are authoritative documents specifying accounting principles or practices. An ASN is generally issued after considering both broad conceptual issues and specific issues raised by practitioners.

    To issue an ASN, the ASB must first consider whether it should issue a standard or make amendments to an existing standard. Once it decides to issue a standard, the ASB will identify the relevant financial reporting framework within which the standard should be applied. Next, the ASB will develop an objective and impartial standard that will meet all relevant requirements specified in Indian law and relevant stakeholders’ expectations. Finally, the ASB will publish the standard in the Official Gazette and submit it for approval to the government of India. Once approved, enforcement of the standard is responsibility of individual regulatory agencies such as accountants’ bodies or securities exchanges.

    Conclusion

    In conclusion, the procedure for issuing accounting standards in India can be complex and time-consuming. However, with the help of a credible accounting firm, it is possible to navigate these waters successfully. Whether you are new to the country or simply looking to update your current practices, working with an experienced professional should be your first step. Thank you for reading!

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