The Institute of Chartered Accountants of India (ICAI) , to harmonize the diverse accounting policies and practices, constituted at Accounting Standard Board (ASB) on 21st April 1977. According to some authorities like Yorston, Smyth and Brown- ‘a standard is a performance target or goal or an agreed criterion of what is proper practice in a particular situation.’ There are some other authorities who prefer to use the term “Accounting Principles” in place of “Accounting Standards”. The need for this accounting evolution is not necessarily driven by the standards themselves, but by the fact that we continue to find new and often more complex ways of doing business. Despite the obstacles that may be encountered in developing a concrete framework of International Accounting Standards and trying to create one global accounting system however it is a gradual process for countries to migrate and adopt this system. Key points: The new accounting standards for small and micro-entities apply for accounting periods beginning on or after January 2016. 3. This essay will elaborate as well how certain industries reject the idea of having International Accounting Standards. Privacy Policy 8. IFRS Standards address this challenge by providing a high quality, internationally recognised set of accounting standards that bring transparency, accountability and … Managerial accounting follows many standards and procedures in many fields of business, such as economics, financial management, accounting, and others, depending on the need of the management. In addition, there must not be any ambiguity and uncertainty relating to the facts, figures and terms which are contained in the financial statements and will be presented to the users of accounting information. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. We are on schedule for convergence with IFRS from 2011. Japan is expected to adopt by 2015 or 2016 although it permits certain domestic companies to introduce IFRSs after 31st March 2010. It is critical to have a standardized accounting; firstly the strategic decision making would be a lot more accurate and secondly increase in confidence. Net Profit or Loss for the Prior Period Items and Changes in Accounting Policies—Revised, 8. Key areas of difference between FRS 102 and FRSSE include investment properties and financial instruments. Objectives and Features 4. The same is possible only when both of them follow identical method of valuing closing stock. Our academic experts are ready and waiting to assist with any writing project you may have. Recognition of financial events; Measurement of financial transactions; Presentation of financial statements in a fair manner; Disclosure requirement of companies to ensure stakeholders are not misinformed; Browse more Topics under Accounting Standards. all European Union, Hong Kong, Australia Malaysia, Pakistan, Russia, South Africa, Singapore, Turkey etc.). On 21st April 1977, The Institute of Chartered Accountants of India, as a premier accounting body in our country, set up the “Accounting Standard Board” (ASB) to harmonies the diverse accounting policies and practice prevalent in our country. Some International Accounting Standards (IAS) which were issued between 1973 and 2001 by he IASC (International Accounting Standards Committee) form a part of International Financial Reporting Standards (IFRS). For example, Mexico will adopt IFRSs to be standard from 2012 for all listed companies whereas Canada and Korea are expected to introduce by 2011. Accounting Standards mainly deal with four major issues of accounting, namely. Larger … Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. It includes a statement acknowledging such conformity in their audit reports. Provisions, Contingent Liabilities and Contingent Assets, 30. TOS 7. All financial information (i.e. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Do you have a 2:1 degree or higher? (ii) To work for the improvement and harmonisation of regulation of Accounting Standards and procedures relating to the presentation of financial statements. Needless to mention that the Institute of Chartered Accountants of India and the Institute of Cost and Works Accountants of India are Members of the International Accounting Standards Committee. Study for free with our range of university lectures! After reading this article you will learn about: 1. IFRS 5: Non-Current Assets held for Sale and Discontinued Operations, IFRS 6: Exploration for and Evaluation of Mineral Resources, IFRS 7: Financial Instruments; Disclosures. 1. In the course of this essay, the topic that will be discussed is the importance of having international accounting standards. The IFRS even is not free from snags. These companies must follow the requirements of IFRSs within the next three years. *You can also browse our support articles here >. The question, therefore, arises as to how to ensure that accounting standards are meeting global needs? The Case for Principle-Based Accounting 1056 Words | 5 Pages. Accounting for Investments in Associates in Consolidated Financial Statement, 27. Accounting standards are needed so the financial statements will fairly and consistently describe the financial performance of an organization (QuickMBA Accounting, 1997-2007). (Vass, P.1990) On the other hand if the accounting system were standardized that would bring authority simultaneously and everything would be a lot more transparent as well as consistent regardless if it was private or public sector. According to him: “When we sit round the IASC Board table and in the steering committee which creates the standard, we do so in our capacity as experts in Accounting and certainly not as auditors. Plagiarism Prevention 4. Accounting for the Effects of Changes in Foreign Exchange Rates—Revised, 23. Content Filtrations 6. You can view samples of our professional work here. Practically speaking, in order to avoid the variance which may arise between the accounting principles and accounting practice and also to find a uniformity among diversity among the various underlying principles of accounting. If we merely look at accountings’ basic purpose of accounting standards, it is to facilitate the provision of financial information as well as, to give a clear picture to corporations’ investors of their cash inflow, assets, equity and liability , revenues and expenditures etc. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. As mentioned earlier, the banking industry opposes in having such a standard, however if we look at Dubai, United Arab Emirates, with the excessive borrowing and lending with International banks in construction projects, caused “Dubai World” to collapse, as a result it put Dubai in great debt, this is a classical example for the need of International Accounting Standards, where Investors are protected, with transparency that would allow investors to make an accurate decision. 1st Jan 1970 Their objective is to provide financial information to investors, lenders, creditors, contributors, and others that is useful in making decisions about providing resources to the entity. One school of thought believe that International Accounting Standards is committed in developing, the public interest, by setting a sole set of high quality, understandable and enforceable global accounting standards that require transparent and comparable information in general financial statements. creditors, investors, shareholders etc. The need for International Accounting Standards is essential; however there are a lot of obstacles that needs to be addressed and put into consideration. (c) Subsidiary of a foreign company must use IFRS if its parent company follows the same. For example, if Firm A follows the FIFO method of valuation of stock whereas Firm B follows the LIFO method for valuing stock, the comparison between the two firms becomes useless. Copyright 10. As such Indian listed companies are trying to achieve the important milestones while adopting various clauses of the regulations of IFRSs. As such, it becomes necessary to develop some GAAP (Generally Accepted Accounting Principles) while preparing the financial statements by which the language of the business can be communicated to the users. The United States of America is also progressing towards IFRS. Need for Accounting Standards. In order to formalize their relationship, International Accounting Standards Committee (IASC) and International Federation of Accountants (IFAC) constituted a working group which has, in the meantime) issued a statement of ‘Mutual Commitments’. Some believe that with the adoption of such a standard, this would assist in global economic stability. Financial Accounting Standards. (M.V. Thus, the Standards are considered as a guide for maintaining and preparing accounts. Accounting VAT Registration No: 842417633. Prohibited Content 3. It helps in dissemination of timely and useful financial information to all Stakeholders and users. According to a number of analysts they believe in order to regain confidence following the scandals, where accounting fraud was discovered. Formulation of Accounting … Development. Many countries have their respective plans to introduce IFRSs as early as possible. Company Registration No: 4964706. The Accounting Standards will, however, be issued under the guidance of the Council. Concept of Accounting Standards 2. It will improve and increase the quality of information and will also reduce the cost of comparing alternative investments. Accounting Standards are the one that helps in bringing the uniformity in whole accounting. Listed companies having a Net worth of Rs. Another name of guidelines is Accounting Policies. Accounting standards specify how transactions and other events are to be recognized, measured, presented and disclosed in financial statements. 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