Accounting Standards and Convergence

Questions and Answers

To provide adequate guidance for accounting standards

To ensure transparency in the standard-setting process

To curb overstating profits and assets (correct)

To integrate International Accounting Standards with Indian laws

To provide guidance on International Financial Reporting Standards (IFRSs)

To constitute the National Financial Reporting Authority (NFRA)

To take a leadership role in constituting the Accounting Standards Board (ASB) (correct)

To regulate the application of accounting standards in India

To integrate International Accounting Standards with Indian laws (correct)

To ensure convergence with global accounting standards

To regulate the application of accounting standards in India

To provide guidance on revenue expenditure and capitalisation

<p>To spell out the accounting standards applicable for companies in India</p> Signup and view all the answers

<p>To facilitate comparability of financial statements across countries</p> Signup and view all the answers

Study Notes

Accounting Standards give a sense of faith and reliability to users
They make financial statements of different companies comparable, helping investors in decision-making
They prevent misleading accounting treatments and manipulation of data by management

Indian companies' recent overseas acquisitions require adoption of high-quality standards to convince foreign enterprises about financial standing and governance
The Government of India decided to converge with IFRSs instead of adopting them
ICAI worked towards convergence of global accounting standards, considering IFRS application in Indian corporate environment

Ind AS are issued by the Central Government of India under ICAI supervision and consultation with NFRA
NFRA recommends these standards to the MCA for application in Indian companies
Global Standards facilitate cross-border flow of money, global listing, and comparability of financial statements

Convergence contributes to the free flow of global investment and achieves substantial benefits for all capital market stakeholders
It improves investors' ability to compare investments globally, lowering their risk of error
It facilitates accounting and reporting for companies with global operations, eliminating costly requirements like reinstatement of financial statements

ICAI took the leadership role in constituting the Accounting Standards Board (ASB) in 1977
ASB considered IASs/IFRSs while framing Accounting Standards in India, integrating them with applicable laws and business environment
The standard-setting procedure includes identification of areas, constitution of study groups, and consultation with stakeholders