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Accounting Standards Basics

Accounting Standard is a policy document issued by the expert accounting body or by Government or other regulatory bodies covering the aspects of recognition, measurement, treatment, presentation, and disclosure of accounting transactions in the financial statement. Accounting Standards in India are issued by the Institute of Chartered Accountants of India.

The Objective of Accounting Standards is to standardize the diverse accounting policies and practices with a view to eliminating to the extent possible the non-comparability of financial statements and add reliability to the financial statements.

Auditors Duty
Auditors are dutybound while discharging their attest function to ensure the Accounting Standards are implemented. 

It is the duty of the auditor to examine whether the Accounting Standard is complied with in the presentation of Financial Statement. Any deviation from the accounting standard shall be disclosed so that the user of financial statements may be aware of such deviation. 

Section 143(2) and 143(3)(e) of the Companies Act 2013 require the auditors to report whether in his opinion the financial statements comply with accounting standards referred to in section 133 of the Companies Act 2013. 

Management Duty 
It is the responsibility of the management of the enterprise to ensure compliance of accounting standards in preparation of the financial statements. 

Financial statements cannot be described as complying with the accounting standards unless they comply with all the requirements of each applicable accounting standard. 

Section 134(5)(a) states that Director responsibility statements shall include that in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departure.