[ecis2016.org] Here’s all you need to know about accounting standards.
Accounting standards are documented policy statements that include the principles of recognition, evaluation, interpretation, representation, and communication of accounting information in financial statements. These policies might be established by an expert accounting organisation, the government, or any other regulatory agency.
You are reading: What are accounting standards?
Classification of organisations
Companies are categorised and ranked according to their level, with Level I being the lowest and Level III being the highest. Accounting standards are applied to the companies on the basis of this categorisation and the category into which they fall.
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Level I Organisations
Companies that qualify as Level I Businesses might come from any one of the following categories, or even more than one.
- Companies that have their equity or debt instruments listed on stock exchanges, in India or outside India.
- Companies that are currently going through the process of registering their stocks or debt securities. The resolution passed by the board of directors has to be produced as proof.
- Financial institutions, including cooperative banking systems
- Companies that are in the business of providing insurance
- Companies with turnover of more than Rs. 50 crore, as determined by authenticated financial accounts, from all sectors of commerce, industry, and entrepreneurship
- Companies that have more than Rs. 10 crores debt at any moment in the fiscal period are included in this category.
- Parent and subsidiary businesses of any of the aforementioned companies at any point in time during the fiscal period.
Level II Organisations
Companies that qualify as Level II Enterprises may be classified in any one of the following categories, or in more than one.
- Companies with turnover larger than 40 lakhs but less than 50 crores, as determined by authenticated financial accounts, from all sectors of commerce, industry, and entrepreneurship
- Companies with yearly revenue larger than 1 crore but less than 10 crores, as determined by authenticated financial accounts, from all sectors of commerce, industry, and entrepreneurship
- Firms that are managing companies or subsidiaries of any of the aforementioned businesses at any point in time during the fiscal period
Level III Organisations
Enterprises that do not qualify for either Level I or Level II are classified as Level III organisations.
Compliance with accounting norms
| Accounting Standards | Level | ||
| I | II | III | |
| AS 1 Disclosure of Accounting Principles | Yes | Yes | Yes |
| AS 2 Valuation of Inventories | Yes | Yes | Yes |
| AS 3 Cash Flow Statements | Yes | No | No |
| AS 4 Contingencies and Events Occurring After the Balance Sheet Date | Yes | Yes | Yes |
| AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies | Yes | Yes | Yes |
| AS 6 Depreciation Financial reporting | Yes | Yes | Yes |
| AS 7 Construction Contracts (Revised 2002) | Yes | Yes | Yes |
| AS 9 Revenue Recognition | Yes | Yes | Yes |
| AS 10 Property, Plant and Equipment | Yes | Yes | Yes |
| AS 11 The Implications Of Foreign Exchange Rate Changes (Revised 2003) | Yes | Yes | Yes |
| AS 12 Accounting for Grants from the Ministry | Yes | Yes | Yes |
| AS 13 Accounting for Investments | Yes | Yes | Yes |
| AS 14 Accounting for Amalgamations | Yes | Yes | Yes |
| AS 15 Employee Benefits (Revised 2005) | Yes | Yes | Yes |
| AS 16 Borrowing Costs | Yes | Yes | Yes |
| AS 17 Segment Reporting | Yes | No | No |
| AS 18 Related Party Disclosures | Yes | No | No |
| AS 19 Leases | Yes | Partial | Partial |
| AS 20 Earnings Per Share | Yes | Partial | Partial |
| AS 21 Consolidated Financial Statements | Yes | No | No |
| AS 22 Accounting for Taxes on Income | Yes | Yes | Yes |
| AS 23 Accounting for Investments in Associates in Consolidated Financial Statements | Yes | No | No |
| AS 24 Discontinuing Operations | Yes | No | No |
| AS 25 Interim Financial Reporting | Yes | No | No |
| AS 26 Intangible Assets | Yes | Yes | Yes |
| AS 27 Financial Reporting of Interests in Joint Ventures | Yes | No | No |
| AS 28 Impairment of Assets | Yes | Yes | Yes |
| AS 29 Provisions, Contingent Liabilities and Contingent Assets | Yes | Partial | Partial |
AS 19: Not applicable sections
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The following sections of AS 19 are not applicable to level II and III organisations:
- 22(c), (e) and (f)
- 25(a), (b) and (e)
- 37(a), (f) and (g)
- 46(b), (d) and (e)
In accordance with the requirements outlined in Part IV of Appendix VI of the Companies Act of 1956, all businesses are required to provide a disclosure of their earnings per share within their annual financial reports.
Publication of dispersed earnings per share and other information required by section 48 is not mandatory for Level II and III firms under AS 20. As a result, only Level I businesses are obligated to adopt AS 20 in its entirety, without any exemptions or modifications.
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Source: https://ecis2016.org
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