STATUS OF ACCOUNTING STANDARDS ISSUED BY ICAI FOR NON-CORPORATES

Note 1:

In view of the applicability of the accounting standards and exemptions/relaxations for SMEs, the necessary modifications have been made in AS 3, AS 17, AS 18, AS 19, AS 20, AS 24 and AS 28, coming into effect in respect of accounting periods commencing on or after 1-4-2004. Relaxations for AS 29 are incorporated in the AS itself.

Note 2:

AS 4 – Contingencies and Events Occurring after the Balance Sheet Date – paras 1(a), 2.3.1, 4(4.1 to 4.4), 5(5.1 to 5.6), 6, 7 (7.1 to 7.3), 9.1 (relevant portion), 9.2, 10, 11, 12 and 16) stand withdrawn. Applicability of the proposed Accounting Standard on financial instruments, paragraphs which deal with contingencies would remain operational to the extent they cover impairment of assets not covered by other Accounting Standards. For example, provision for bad and doubtful debts.

Note 3:

Limited revision to AS 5 by adding para 33 effective for accounting periods commencing on or after 1-4-2001.

Note 4:

From the date of coming into operation of AS 26, the following stand withdrawn:

AS 8 – Accounting for Research and Development.

AS 6 – Depreciation Accounting only with respect to amortisation of intangible assets.

AS 10 – Accounting for Fixed Assets – paras 16.3 to 16.7, 37 and 38.

Note 5:

1. The revised AS 7 (2002) is applicable in respect of all contracts entered into during the accounting periods commencing on or after 1-4-2003; however, for contracts entered into prior to this date, AS 7 (1983) would continue to be applicable.

2. The revised AS 11 (2003) would supersede AS 11 (1994); however, accounting for transactions in foreign currencies entered into before the date the revised AS 11 (2003) comes into effect, i.e., 1-4-2004, AS 11 (1994) would continue to be applicable.

Note 6:

From the date of coming into operation of AS 16, the following stand withdrawn:

AS 10 – Accounting for Fixed Assets – paragraphs 9.2, 29 (except the first sentence).

Note 7:

Limited revision to AS 13 in para 2 effective for accounting periods commencing on or after 1-4-2002.

Note 8:

Limited revision to AS 14 in paras 23 and 42 effective for accounting periods commencing on or after 1-4-2004.

Note 9:

Exemptions and Relaxations for AS 15 (Revised)

1. Need not be accounted for on discounted basis (paras 46 and 139).
2. Determination of liability should be based on PUCM (discount rate provisions shall apply).
3. For recognition and measurement of liabilities under DBP, PUCM need not be applied. Some other rational methods can be applied.
4. Actuarial assumptions should be disclosed.

Note 10:

Limited revision to AS 18 in para 26 and insertion of para 27 effective for accounting periods commencing on or after 1-4-2003.

Note 11:

1. AS 19 – paras 22(c), (e) and (f); 25(a), (b) and (e); 37(a), (f) and (g); and 46(b), (d) and (e) with respect to disclosures, of AS 19 are not applicable to Level II and Level III enterprises.

2. AS 20 is applicable to Level II and Level III enterprises, if they disclose earnings per share. However, all the enterprises, including companies, which fall either in Level II or Level III, are not required to disclose diluted earnings per share and information required by para 48 of AS 20.

3. At present, in India, as no enterprise is required to present interim financial report within the meaning of AS 25, compliance with the disclosure and presentation requirements and measurement principles of AS 25 are applicable to certain Level I enterprises, for their interim financial results. At present, in any case, AS 25 is not mandatorily applicable to Level II and Level III enterprises except for companies whose shares are listed.

4. AS 29 – para 67 is not applicable to Level II enterprises and paras 66 and 67 are not applicable to Level III enterprises.

Note 12:

AS 21 is mandatory if an enterprise presents consolidated financial statements. In other words, the accounting standard does not mandate an enterprise to present consolidated financial statements but, if the enterprise presents consolidated financial statements for complying with the requirements of any statute or otherwise, it should prepare and present consolidated financial statements in accordance with AS 21. Section 129(3) of the Companies Act, 2013 mandates that where a company has one or more subsidiaries, it shall, in addition to its “stand alone” financial statements, also prepare consolidated financial statements of the company and of all the subsidiaries in the same form and manner as that of its own.

Note 13:

AS 23 and AS 27 have come into effect in respect of accounting periods commencing on or after 1-4-2002. AS 23 and AS 27 are mandatory if an enterprise presents consolidated financial statements. In other words, if an enterprise presents consolidated financial statements, it should account for investments in associates in the consolidated financial statements in accordance with AS 23, AS 27 from the date of its coming into effect; i.e., 1-4-2002. Section 129(3) of the Companies Act, 2013 mandates that where a company has one or more subsidiaries, it shall, in addition to its “stand alone” financial statements, also prepare consolidated financial statements of the company and of all the subsidiaries in the same form and manner as that of its own.

Note 14:

Limited revision to AS 25 in para 16 effective for accounting periods commencing on or after 1-4-2004. Para 29(c) and certain paragraphs of Appendix 3 have also been revised to omit the word "effective".

Note 15:

Limited revision to AS 26 in para 6 effective for accounting periods commencing on or after 1-4-2003.

Note 16:

Limited revision to AS 27 in para 6 and deletion of para 9 effective for accounting periods commencing on or after 1-4-2004.

Note 17:

1. Applicable only for accounting periods commencing on or after 1-4-2008.
2. Option to measure value in use on a reasonable estimate basis under para 121(g).

Note 18:

Limited revision to AS 20 in para 48 (and consequential in para 51) effective for accounting periods commencing on or after 1-4-2004.

Other Notes:

I. Applicability of Accounting Standards

1. Enterprises are classified into three categories, viz., Level I, Level II and Level III.
2. Level I enterprises are to comply fully with all the accounting standards;
3. Level II and Level III enterprises are considered as Small and Medium Sized Enterprises (SMEs). Level II and Level III enterprises are fully exempted from certain accounting standards, which primarily deal with disclosure requirements, given relaxations from certain disclosure requirements in respect of other accounting standards, which deal with recognition, measurement and disclosure requirements.

II. Criteria for classification of enterprises

1. Level I Enterprises

Enterprises which fall in any one or more of the following categories, at any time during the accounting period:

1. Whose equity or debt securities are listed, whether in India or outside India.
2. Which are in the process of listing their equity or debt securities as evidenced by the board of directors’ resolution.
3. Banks including co-operative banks.
4. Financial Institutions.
5. Carrying on insurance business.
6. All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds ₹ 50 crores. Turnover does not include 'other income'.
7. All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of ₹ 10 crore at any time during the accounting period.
8. Holding and subsidiary enterprises of any one of the above at any time during the accounting period.

2. Level II Enterprises

Enterprises which are not Level I but fall in one or more of the following categories:

1. All commercial, industrial and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds ₹ 40 lakhs but does not exceed ₹ 50 crores. Turnover does not include 'other income'.
2. All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of ₹ 1 crore but not in excess of ₹ 10 crores at any time during the accounting period.
3. Holding and subsidiary enterprises of any one of the above at any time during the accounting period.

3. Level III Enterprises

Enterprises which are not covered under Level I and Level II.

III. Accounting Standards as applicable to different levels

IV. Note 2:

It may be noted that where a requirement of an accounting standard is different from the applicable law, requirements as per the law would prevail. However, it is pertinent to note that since Schedule III to the Companies Act, 2013 gives overriding status to the requirements of the Accounting Standards and other requirements of the Act, the principle of law overriding the Accounting Standards is inapplicable in the context of Schedule III.

STATUS OF ACCOUNTING STANDARDS ISSUED BY ICAI FOR CORPORATES

NOTES

Note 1: It is not mandatory for SMCs. However, SMCs are encouraged to apply this standard.

Note 2 : As per the Notified AS, all portions of the Standard that deal with contingencies are applicable only to the extent not covered by other Accounting Standards prescribed by the Central Government.

Note 3 : SMCs are given specific exemptions from the following specified paras of AS 15:

1. Paragraphs 11 to 16 of the Standard to the extent they deal with recognition and measurement of short-term accumulating compensated absences which are non-vesting (i.e., short-term accumulating compensated absences in respect of which employees are not entitled to cash payment for unused entitlement on leaving);

2. Paragraphs 46 and 139 of the Standard which deal with discounting of amounts that fall due more than 12 months after the balance sheet date;

3. Recognition and measurement principles laid down in paragraphs 50 to 116 and presentation and disclosure requirements laid down in paragraphs 117 to 123 of the Standard in respect of accounting for defined benefit plans. However, such companies should actuarially determine and provide for the accrued liability in respect of defined benefit plans by using the Projected Unit Credit Method and the discount rate used should be determined by reference to market yields at the balance sheet date on government bonds as per paragraph 78 of the Standard. Such companies should disclose actuarial assumptions as per paragraph 120(l) of the Standard; and

4. Recognition and measurement principles laid down in paragraphs 129 to 131 of the Standard in respect of accounting for other long-term employee benefits. However, such companies should actuarially determine and provide for the accrued liability in respect of other long-term employee benefits by using the Projected Unit Credit Method and the discount rate used should be determined by reference to market yields at the balance sheet date on government bonds as per paragraph 78 of the Standard.

Note 4 : SMCs are exempted from certain disclosure requirements of paragraphs 22(c), (e) and (f); 25(a), (b) and (e); 37(a) and (f); 46(b) and (d) of this standard.

Note 5 : SMCs are not required to disclose diluted EPS both including and excluding extraordinary items.

Up to 31st March, 2014

Note 6: AS 21 is mandatory if an enterprise presents consolidated financial statements. In other words, the accounting standard does not mandate an enterprise to present consolidated financial statements but, if the enterprise presents consolidated financial statements for complying with the requirements of any statute or otherwise, it should prepare and present consolidated financial statements in accordance with AS 21.

With effect from 1st April, 2014

Note 7: AS 23 and AS 27 are mandatory if an enterprise presents consolidated financial statements. In other words, if an enterprise presents consolidated financial statements, it should account for investments in associates and joint ventures in the consolidated financial statements in accordance with AS 23 and AS 27 respectively.

Note 8: SMCs are allowed to measure the 'value in use' on the basis of reasonable estimate thereof instead of computing the value in use by present value technique. Consequently, if an SMC chooses to measure the 'value in use' by not using the present value technique, the relevant provisions of AS 28, such as discount rate etc., would not be applicable to such an SMC. Further, such an SMC need not disclose the information required by paragraph 121(g) of the Standard.

Note 9 : AS 29, paragraphs 66 and 67 relating to disclosures are not applicable to SMCs.

Note 10 : In respect of accounting for transactions in foreign currencies entered into by the reporting enterprise itself or through its branches before the effective date of the notification prescribed in this standard under section 211 of Companies Act, 1956, the applicability of this standard would be determined on the basis of Accounting Standard (AS) 11 revised by ICAI in 2003

Note 11 : In respect of assets leased prior to the effective date of notification presenting this standard under section 211 of the Companies Act, 1956, the applicability of this Standard would be determined on the basis of the Accounting Standard (AS) 19, issued by ICAI in 2001.

STATUS OF ACCOUNTING STANDARD INTERPRETATIONS ISSUED BY THE ICAI FOR CORPORATES

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