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Accounting Standards I List of AS I Convergence towards Global Standards I Hasham Ali Khan I
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Accounting Standards I List of AS I Convergence towards Global Standards I Hasham Ali Khan I

Introduction

In this section, the speaker introduces the series of videos on accounting standards and outlines the topics covered in previous videos.

Accounting Standards Overview

  • The speaker has previously discussed accounting standards' objectives, benefits, and limitations in the first two videos.
  • The upcoming video will focus on the process of formulating accounting standards, including who prepares them and how they are issued.

List of Accounting Standards

This part delves into the list of accounting standards issued by ICAI and discusses the conversion of Indian Accounting Standards with global standards.

List of Accounting Standards

  • It is crucial to watch all videos sequentially to gain a comprehensive understanding.
  • The Institute of Chartered Accountants of India (ICAI) has issued 29 accounting standards so far.
  • Out of these, two accounting standards have been withdrawn: AS6 on depreciation accounting and AS8 on research and development.

Global Convergence

  • Due to globalization, there is a need to align Indian Accounting Standards with global standards for international consistency.

Global Accounting Standards

This segment focuses on the necessity for global accounting standards and provides an overview of specific accounting standards.

Necessity for Global Standards

  • With economies becoming more integrated globally, stakeholders require financial information based on international standards.
  • The convergence between Indian and global accounting standards is essential to keep pace with international practices.

Specific Accounting Standards

  • AS1 deals with disclosure of accounting principles followed in financial statement preparation.
  • AS2 covers valuation methods for inventories or unsold stock.
  • AS3 introduces cash flow statements as an essential part alongside income statements and balance sheets.
  • AS4 addresses contingencies and events occurring after the balance sheet date that impact financial reporting.

Accounting Standards Overview

In this section, the speaker discusses various accounting standards and their significance in financial reporting.

Accounting Standards Covered

  • Accounting Standard 6: Depreciation
  • Accounting Standard 7: Construction Contracts
  • Accounting Standard 8: Revenue Recognition (withdrawn)
  • Accounting Standard 9: Revenue Recognition (merged with AS10)
  • Accounting Standard 11: Changes in Foreign Exchange Rates

Convergence Towards Global Standards

The discussion shifts towards the importance of aligning Indian accounting standards with global standards for effective communication and understanding among stakeholders.

Convergence Importance

  • Need for convergence post-globalization due to integrated economies and free capital flow.
  • Challenges arise when stakeholders belong to different geographies; convergence aids in uniform understanding.

Understanding IFRS and Accounting Standards

In this section, the speaker discusses the importance of having a common language in accounting standards, particularly focusing on International Financial Reporting Standards (IFRS) and the distinction between convergence and adoption.

Importance of Common Language in Accounting Standards

  • The need for a common standard in accounting arises due to stakeholders being globally dispersed.
  • IFRS, which stands for International Financial Reporting Standard, serves as a global standard accepted worldwide by organizations.

Convergence vs. Adoption of IFRS

  • Adoption refers to fully implementing IFRS as issued by the International Accounting Standards Board (IASB).
  • Indian companies adopting IFRS means they completely rely on it instead of Indian standards.
  • Convergence involves aligning Indian accounting standards with IFRS gradually to develop compatible high-quality standards.

India's Approach: Convergence with IFRS

  • India has chosen to converge its accounting standards with IFRS rather than fully adopting them.
Video description

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