Accounting?

Information System

The American Institute of Certified Public Accountants (AICPA) defines

accounting as follows:
"Accounting is the art of recording, classifying, and summarizing in a
significant manner and in terms of money, transactions, and events which are,
in part at least, of a financial character, and interpreting the results thereof.“

Accounting is a language of business.

Nature of Accounting

• Science as well as art

• Systematic Process
• Financial Information
• Quantitative nature
• Recording and Classification
• Financial Reporting
• Decision Making tool
• Regulatory Compliance
 Bookkeeping vs. Accounting

Definition Recording financial Summarizing, analyzing,

transactions and reporting financial
systematically transactions
Primary Tasks Recording sales, Preparing financial
purchases, receipts, and statements, analyzing
payments financial data,
interpreting results
Purpose Ensuring financial Providing insights into
records are up-to-date financial health and
and accurate performance for
decision-making
Accounting conventions are
guidelines used to help companies
determine how to record certain business
transactions that have not yet been fully
addressed by accounting standards.
Difference

Accounting Concept Accounting Convention

❖ Fundamental principles that guide the ❖ Established practices and guidelines

preparation and presentation of used in recording and reporting
financial statements. financial transactions.
❖ Provide a theoretical foundation for ❖ Offer practical guidelines for specific
accounting practices. accounting issues.
❖ Rigid and must be adhered to in all ❖ Flexible and can evolve over time.
circumstances. ❖ Practical and can vary based on
❖ Theoretical and universal. industry or region.
❖ Ensure consistency, reliability, and ❖ Ensure practical and effective
comparability of financial recording and reporting of financial
information. transactions.
 Accounting Standards
Accounting Standards are codified or written statements of accounting rules
and guidelines for preparation and presentation of financial statements
issued by an expert accounting body or by the government or other
regulatory.

Standardisation of
alternative accounting
Purpose/Objectives: treatment

To ensure
1. Uniformity,
2. Reliability,
3. Comparability, and
4. Transparency in financial statements. Benefits

Comparability of Requirements for

financial additional
statements Disclosures
List Of Accounting Standards
14. AS 14 Accounting for Amalgamations
1. AS 1 Disclosure of Accounting Policies
15. AS 15 (Revised) Employee Benefits
2. AS 2 (Revised) Valuation of Inventories
14. AS 16 Borrowing Costs
3. AS 3 (Revised) Cash Flow Statements
17. AS 17 Segment Reporting
4. AS 4 (Revised) Contingencies and Events Occurring
after the Balance Sheet Date 18. AS 18 Related Party Disclosures
5. AS 5 (Revised) Net Profit or Loss for the Period, Prior 19. AS 19 Leases
Period Items and Changes in Accounting Policies
20. AS 20 Earnings Per Share
6. AS 6 (withdrawn pursuant to issuance of AS 10 on
Property, Plant and Equipment 2016) Depreciation 21. AS 21 Consolidated Financial Statements
Accounting 22. AS 22 Accounting for Taxes on Income
7. AS 7 (Revised) Accounting for Construction Contracts 23. AS 23 Accounting for Investments in Associates in
8. AS 8 (withdrawn Accounting for Research and Consolidated Financial
Development pursuant to AS 26 becoming mandatory) Statements
9. AS 9 Revenue Recognition 24. AS 24 Discontinuing Operations
10. AS 10 Property, Plant and Equipment 25. AS 25 Interim Financial Reporting
11. AS 11 (Revised) The Effects of Changes in Foreign 26: AS 26 Intangible Assets
Exchange Rates
12. Accounting for Government Grants 27. AS 27 Financial Reporting of Interests in Joint
Ventures
13. AS 13 Accounting for Investments S 28 Impairment of Assets
29 AS 29 Provisions, Contingent Liabilities &
Contingent Asset
Procedure to Issue Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs (MCA) identifies need for new Ind AS

39 IND AS were notified by
the MCA on 16 feb , 2015.
Formulation by Accounting Standards Board (ASB) of the ICAI

Exposure Draft Issued for Public Comments(Review)

Final Draft Prepared by ASB and Submitted to ICAI Council

ICAI Council Approves and Recommends to NFRA

NFRA Examines and Issues Ind AS through Notification in the gazette.

 Types of Accounting Standards

GAAP GAS IAS IFRS IND AS

AICPA
Based By By by By
AICPA
Standards GASB IASC IASB ASB
by FASB

U.S U.S U.S Rest of Rest of INDIA

the world the
world
 IFRS
IAS
IASB(2001)
GAAP
IASC(1973)
FASB

International Financial Reporting Standards are the accounting IFRS Adoption /IFRS Convergence
standards developed or adopted by an independent, not-for-profit
organisation called the International Accounting Standards Indian Accounting Standards converged
Board(IASB).- 2001. with IFRS are known as IND-AS. Named
and numbered in the same manner.
IFRS are principle-based standards as against rule-based
standards. It allows entities to make estimates and judgments Need for Ind AS
based on size and circumstances of the business
Emphasizes fair value and transparency.
More disclosures are required under Ind
AS as compared to existing standards.

• Financial Globalisaton
• Multinational Corporation
• Accounting Profession
• Government and Revenue
Authorities
 Indian Accounting Standards

Indian Accounting Standards known as Ind As. were developed to harmonize standards related to
international accounting and reporting.

Issued by MCA , Formulated by ASB (ICAI)

IND AS from 1 to 41 and 101 to 116.

Mandatory for all listed companies on stock exchanges in India or outside India.

All unlisted companies with a net worth of Rs 500 crore or more.

Banks , and Insurance Companies whose net worth is more than or equal to 500 crore.

All the NBFCs whose net worth is more and equal to 250 crore.

Voluntory adoption by unlisted companies having a net worth less than rs 500 crore.
The Accounting Standards Board (ASB) was established by the Institute of Chartered Accountants
of India (ICAI) in 1977, in response to the need for standardized accounting practices in the country.

Before the formation of ASBI, accounting practices in India were varied and lacked uniformity, making it
difficult for stakeholders to compare and rely on financial statements. The establishment of ASBI marked
a significant step towards formalizing and standardizing accounting principles and practices.

FUNCTIONS OF ASBI

•Formulation of Accounting Standards

•Review and Revision of Standards
•Convergence with International Standards
•Guidance and Interpretation
•Stakeholder Consultation
•Education and Training
•Research and Development
•Advisory Role
•Collaboration with International Bodies
•Monitoring and Compliance
The National Financial Reporting Authority (NFRA) was constituted on 01st October,2018
as an independent regulatory body by the Government of India under Sub Section (1) of
section 132 of the Companies Act, 2013. It aims to oversee and enforce the quality of
financial reporting by entities under its jurisdiction, ensuring adherence to high standards of
corporate governance.

Functions and Duties

Recommend accounting and auditing policies and standards to be adopted by companies for
approval by the Central Government.

; Monitor and enforce compliance with accounting standards and auditing standards

Oversee the quality of service of the professions associated with ensuring compliance with
such standards and suggest measures for improvement in the quality of service;

Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and
duties.
Sr
IFRS Ind AS
.
Standar IFRS Standard Name Standar Standard under Ind AS Presentation of
N Ind Presentation of
d Ref. d Ref. 18 IAS 1 Financial
o. AS 1 Financial Statements
Statements
First Time Adoption of Ind AS
1 IFRS 1 First Time Adoption of Ind AS
IFRS 101 Ind
19 IAS 2 Inventories Inventories
2 IFRS 2 Share-Based Payments
Ind AS
Share-Based Payments
AS 2
102
Ind AS Statement of Ind Statement of Cash
3 IFRS 3 Business Combination Business Combination 20 IAS 7
103 Cash Flows AS 7 Flows
Ind AS Insurance Contracts
4 IFRS 4 Insurance Contracts
104
Accounting
Policies, Accounting Policies,
Changes in Ind Changes in
Non-current assets held for Non-current assets held for 21 IAS 8
5 IFRS 5 sale and discontinued
Ind AS
sale and discontinued Accounting AS 8 Accounting
105 Estimates and Estimates and Errors
operations operations
Errors
Exploration for and Exploration for and IAS Events After the Ind Events After the
Ind AS 22
6 IFRS 6 Evaluation of Mineral Evaluation of Mineral
106 10 Reporting Period AS 10 Reporting Period
Resources Resources

IAS Ind
7 IFRS 7
Financial Instruments – Ind AS Financial Instruments – 23 Income Taxes Income Taxes
Disclosures 107 Disclosures 12 AS 12

Ind AS
8 IFRS 8 Operating Segments Operating Segments
108

Ind AS
9 IFRS 9 Financial Instruments Financial Instruments
109

Consolidated Financial Ind AS Consolidated Financial

10 IFRS 10
Accounting Practices

Accounting practice encompasses the principles, standards, methods,

and procedures that accountants use to collect, record, classify,
summarize, interpret, and communicate financial information.

Accounting principles and Standards – GAAP , IFRS, IND AS etc

Accounting Cycle

Accounting Methods – Cash basis and Accrual basis of Accounting

Accounting Systems – Single entry and Double entry system

Types of Accounts and transactions .

Financial Statements.