Accounting Standards and IFRS

Introduction

• Speaker: पूजा
• Topic: Accounting Standards and IFRS
• Audience: Primarily commerce students (Class 11th, 12th, BBA, MBA)
• Channel: Accounting Masterclass

Importance of Accounting Standards

• **Need for Standards:"
  • Growth in business and technology requires standardized information.
  • Different organizations used diverse policies, making comparisons difficult.
  • Need for minimum guidelines to ensure reliable and comparable financial statements.

Formation of Standards

• **International Level:"
  • Initially handled by International Accounting Standards Committee (IASC) in 1973.
  • Evolved into the International Financial Reporting Standards (IFRS) foundation.
• **India's Contribution:"
  • Instituted by ICAI (Institute of Chartered Accountants of India) in 1977.
  • India created committees to align with international standards.

Accounting Standards Explained

• **Definition:"
  • Set of certain guidelines, rules, and regulations accepted universally.
  • Ensure consistency in financial statement preparation and presentation.

Key Aspects Covered by Standards

1. **Measurement:"
2. **Presentation:"
3. **Disclosure:"
4. **Accounting Treatment:"
5. **Use of Information:"

Benefits of Accounting Standards

• Uniformity: Ensures uniform accounting practices across enterprises.
• Comparability: Facilitates the comparison of financial statements between different organizations.
• Reliability: Enhances the reliability of financial statements.

Features of Accounting Standards

• Consistency: Reduces variations in accounting treatments.
• Legal Framework: Considers the legal structure and business environment of the country.
• Compulsory Nature: Following accounting standards is mandatory, not optional.

Objective of Accounting Standards

• Minimize differences in accounting policies used by different enterprises.
• Improve the understanding and reliability of financial statements.
• Ensure full and transparent disclosure of relevant information.

List of Major Accounting Standards in India (AS)

• AS 1: Disclosure of Accounting Policies
• AS 2: Valuation of Inventories
• AS 3: Cash Flow Statements
• AS 4: Contingencies and Events Occurring After the Balance Sheet Date
• ... (total 29 AS)

International Financial Reporting Standards (IFRS)

• **Definition:"
  • Set of standards for financial reporting on an international level.
  • Created by the IFRS Foundation.
• **Purpose:"
  • Ensure transparency, accountability, and efficiency in financial markets worldwide.

Conclusion

• Summarized the importance and formation of accounting standards and IFRS.

• Stressed the need for uniformity, comparability, and reliability in financial statements.

• Emphasized that following accounting standards is essential for preparing trustworthy financial statements.

• Thank you for attending!