Financial Final Project

8/14/2019 Financial Final Project

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ACCOUNTING STANDARDSPROJECT

MOHAMMED ARIF KHAN (LEADER)

OVAIS BARDI

RIZWAN LOKHANDWALA

AHMED ABBASI

SHAHBAZ KHAN

Sameer Sir, InstructorRIZVI COLLEGE


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INTRODUCTION

In the eighteenth and the nineteenth centuries, when sole

proprietorship and partnership were predominant forms oforganizations, the main function of financial reporting was toprovide information about the firm to its owner who manage andowned them. With the advent of company form of organizationlater on, the focus of financial reporting has become broader.

Accounting in its broadest sense, is considered with ameasurement of transaction(usually involving money as amedium of exchange but occasionally resulting from barter)transformation (the conversion usually through the process of

production of goods from one form to another) and events (allother economics occurrences external and internal) that affectposition and performance of the entity.

The process of financial reporting of the result of all thistransaction, transformation, and events includes the publicationof sets of the financial statement. If this statement are to beuseful to the entire various group that rely upon them(shareholders, creditor, employees, consumer, supplier, thegovt. etc.). Then unless the special purpose supplementary

statements are produced for particular user groups, it isnecessary that the general purpose financial statement achievethe right balance between the often conflicting interests of thevarious group users.

If published general purpose financial statement are to beneutral vis--vis this entire different group, thereby striking afair balance between their often conflicting interests. It is ofcourse necessary that the accounting standard upon which theyare based should be oriented towards such an objective.

Financial statement has considerable utility in providing a basisfor decision and action by its user. Financial statement facilitatescomparison between different entities, assisting user informulating their future expectation. But this requiresconsistency in using the same accounting policies year afteryear.


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MEANING OF ACCOUNTINGSTANDARDAccounting standard/policies are guideline of operativesignificance. Standard are normative prescription relating toaccounting policies and practices. Standard can be viewed as asystem of measurement and disclosure used in preparation offinancial statement. Accounting standard can be seen as

technical response to call for better financial and reporting or asa reflection of society changing expectation of corporatebehavior and vehicle in social and political monitoring andcontrol of enterprise.

IASB Chairman.Appointed by the Trustees. In late June 2000, the Trusteesannounced the appointment of Sir David Tweedie as the firstChairman of the restructured IASB. Sir David continues today asIASB Chairman.

Board meetings.The new IASB held its first official meeting in London in April2001. The Board meets monthly (except August) forapproximately one week. Board meetings are normally held atthe IASB's office in London. Twice each year, the IASB and the USFinancial Accounting Standards Board (FASB) hold a joint meeting(usually April and October). The April meeting is normally held atthe FASB's office in the United States.


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NEED FOR HAVING ACCOUNTINGSTANDARD

There is a need for making accounting information comparable.in order that the user can take better economic decision out ofavailable comparable alternative, consistency and uniformity offinancial statement is called for.

The stability of our economic system depends upon theconfidence that the user group have in the fairness andreliability of the financial statement on which they rely. It is the

function of accounting standard to create this general sense ofconfidence by providing structural framework within whichcredible financial statements can be produced.

accounting standard are vitally important in resolving potentialconflicts of financial interest among the various external groupthat use and rely upon published financial statements . Suchconflicts are frequent and real. Thus, for example, potentialshareholder and existing shareholder may have opposite inassessing the profitability and value of a company. Potential

share holder are likely to be dismayed if they buy shares on thestrength of published financial report which later turn out tohave been optomistic present shareholder, who sell under suchcircumstances, are likely to be more satisfied with the outcome,and certainly more satisfied than if they retain holding on thestrength of unduly optimistic financial report.

Thus, may also be potential conflicts of interest betweenshareholder and creditor groups in the case of a company that isrunning into financial difficulties and shareholders, employees,

customers, and suppliers frequently have conflicting in theoutcome of the measure companies economic performance.

In order to increase comparability of financial statements ofnational an internationally placed companies harmonization ofaccounting policies/ practices become inevitable and it isbecause accounting standard are needed.


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THE ACCOUNTING STANDARDS-SETTING PROCESS

The accounting standard setting, by its very nature, involvesreaching an optimal balance of the requirements of financialinformation for various interest groups having a stake in financialreporting. With a view to reach consensus, to the extentpossible, as to the requirements of the relevant interest-groupsand thereby bringing about general acceptance of the AccountingStandards among such groups, considerable research,

consultations and discussions with the representatives of therelevant interest-groups at different stages of standardformulation becomes necessary. The standard-setting procedureof the ASB, as briefly outlined below, is designed in such a wayso as to ensure such consultation and discussions:

Identification of the broad areas by the ASB for formulatingthe Accounting

Standards.

Constitution of the study groups by the ASB for preparing the

preliminary drafts

Of the proposed Accounting Standards.

Consideration of the preliminary draft prepared by the studygroup by the ASB

And revision, if any, of the draft on the basis of deliberations atthe ASB.

Circulation of the draft, so revised, among the Councilmembers of the ICAI and

12 specified outside bodies such as Standing Conference ofPublic Enterprises

(SCOPE), Indian Banks Association, Confederation of IndianIndustry (CII),

Securities and Exchange Board of India (SEBI), Comptroller andAuditor General


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Of India (C& AG), and Ministry of Company Affairs, for comments.

Meeting with the representatives of specified outside bodiesto ascertain their

Views on the draft of the proposed Accounting Standard.

Finalisation of the Exposure Draft of the proposed AccountingStandard on the

basis of comments received and discussion with therepresentatives of specified

Outside bodies.

Issuance of the Exposure Draft inviting public comments.

Consideration of the comments received on the Exposure

Draft and finalisation ofThe draft Accounting Standard by the ASB for submission to theCouncil of the

ICAI for its consideration and approval for issuance.

Consideration of the draft Accounting Standard by the Councilof the Institute,

and if found necessary, modification of the draft in consultationwith the ASB.


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ROLE OF NATIONAL ACCOUNTING

STANDARD BOARD

On the structure and purpose of the group, NSS membersdiscussed and agreed the following:

Role and objectives of the NSS group the main priority forthe group should be undertaking research, both pro-activelyand at the request of the IASB, aimed at influencing the IASBin its deliberations. It was also agreed that the group should

submit a report to the IASB and the public on the outcome ofits meetings;

Longer-term role: the NSS group discussed how it mightengage in the forthcoming IASCF constitutional review(concluding in 2009) and what place if any the group sawfor itself with the IASB going forward. NSS members agreedthat to review the existing Statement of Best Practice:Working Relationships between the IASB and other AccountingStandard-Setters to see whether it remained relevant ;

Membership of the NSS group it was agreed that membershipof the group should be kept flexible and open to any standard-setter (or regional organization such as EFRAG) that waswilling and able to invest the time and resources in attendingand actively participating in the group;

Meetings of the group it was agreed that the current cycle oftwo meetings a year was about right, with one scheduledadjacent to the IASBs annual meeting with World Standard-Setters. There was a general consensus that the meetings

should be in public and an investigation undertaken of howthe activities of the group might be better publicized throughthe web;

Chairmanship it was agreed that Ian Mackintosh (Chairman ofthe UK Accounting Standards Board, ASB) would continue tochair the group for the time being.


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OLD STRUCTURE: 1973 - 2000

The International Accounting Standards Committee (IASC) wasformed in 1973 through an agreement made by professionalaccountancy bodies from Australia, Canada, France, Germany,Japan, Mexico, the Netherlands, the United Kingdom and Ireland,and the United States of America. Additional sponsoring memberswere added in subsequent years, and in 1982 the sponsoring"members" of the IASC comprised all of the professionalaccountancy bodies that were members of the International

Federation of Accountants (IFAC).Accounting standards were set by a part-time, volunteer IASCBoard that had 13 country members and up to 3 additionalorganizational members. Each member was generallyrepresented by two "representatives" and one "technicaladvisor". The individuals came from a wide range of backgrounds accounting practice, business (particularly multinationalbusinesses), financial analysis, accounting education, andnational accounting standard-setting. The Board also had a

number of observer members (including representatives ofIOSCO, FASB, and the European Commission) who participated inthe debate but did not vote.

Major components of the old IASC structure were:

IASC Board described above.

Consultative Group an advisory body representing a widerange of international organizations with an interest inaccounting.

Standing Interpretations Committee (SIC) developed andinvited public comment on interpretations of IASC Standards,subject to final approval by the IASC Board.

Advisory Council oversight body (despite its name, theAdvisory Council functioned more like the Board of Trustees ofthe new IASC Foundation, described below).
http://www.ifac.org/http://www.ifac.org/http://opt/scribd/conversion/tmp/scratch14209/restiosc.htmhttp://opt/scribd/conversion/tmp/scratch14209/restfasb.htmhttp://opt/scribd/conversion/tmp/scratch14209/resteuro.htmhttp://opt/scribd/conversion/tmp/scratch14209/restiosc.htmhttp://opt/scribd/conversion/tmp/scratch14209/restfasb.htmhttp://opt/scribd/conversion/tmp/scratch14209/resteuro.htmhttp://www.ifac.org/http://www.ifac.org/


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Steering Committees expert task forces for individual agendaprojects.

The International Accounting Standards Committee wasessentially the structure, rather than a committee in the

traditional sense of a group of people. Historical Chronology of the IASC and IASB.

More Historical Facts about the IASC
http://opt/scribd/conversion/tmp/restruct/chrono.htmhttp://opt/scribd/conversion/tmp/scratch14209/iaschistory.htmhttp://opt/scribd/conversion/tmp/restruct/chrono.htmhttp://opt/scribd/conversion/tmp/scratch14209/iaschistory.htm


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THE NEW STRUCTURE:BACKGROUND AND CHRONOLOGY

After nearly 25 years of achievement, IASC concluded in 1997that to continue to perform its role effectively, it must find away to bring about convergence between national accountingstandards and practices and high-quality global accounting

standards. To do that, IASC saw a need to change its structure. Inlate 1997 IASC formed a Strategy Working Party to re-examine itsstructure and strategy. (Jacques Manardo, Deloitte ToucheTohmatsu Global Managing Partner-Strategic Clients, was amember of that group.)

The Strategy Working Party published its Report, in the form of aDiscussion Paper, in December 1998. After soliciting comments,the Working Party published its Final Recommendations inNovember 1999.

The IASC Board approved the proposals unanimously in December1999, and the IASC member bodies did the same in May 2000. Anew IASB Constitution took effect 1 July 2000. The standards-setting body was renamed the International Accounting StandardsBoard (IASB). It would operate under a new InternationalAccounting Standards Committee Foundation (IASCF).

On 1 April 2001, the new IASB took over from the IASC theresponsibility for setting International Accounting Standards.

In June 2005, the Trustees of the IASC Foundation completedtheir 2003-2005 Constitution Review and approved a broad rangeofChanges to the Constitution that went into effect on 1 July2005. This web page reflects those changes.
http://opt/scribd/conversion/tmp/resource/ref.htmhttp://opt/scribd/conversion/tmp/resource/ref.htmhttp://opt/scribd/conversion/tmp/scratch14209/constreview.htmhttp://opt/scribd/conversion/tmp/scratch14209/constreview.htmhttp://opt/scribd/conversion/tmp/resource/ref.htmhttp://opt/scribd/conversion/tmp/resource/ref.htmhttp://opt/scribd/conversion/tmp/scratch14209/constreview.htmhttp://opt/scribd/conversion/tmp/scratch14209/constreview.htm


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OVERVIEW OF THE RESTRUCTEDIASB

The IASB is organised under an independent Foundation named theInternational Accounting Standards Committee Foundation (IASCF). ThatFoundation is a not-for-profit corporation created under the laws of the

State of Delaware, United States of America, on 8 March 2001. Componentsof the new structure:

International Accounting Standards Board has sole responsibility forestablishing International Financial Reporting Standards (IFRSs).

IASC Foundation oversees the work of the IASB, the structure, andstrategy, and has fundraising responsibility.

International Financial Reporting Interpretations Committee (IFRIC) develops interpretations for approval by the IASB.

Standards Advisory Council (SAC) advises the IASB and the IASCF.

Working Groups expert task forces for individual agenda projects.


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CONCLUSION

This is a study of 1982 largest selected companies on differentaspects of accounting standard setting in India. The main thrustof the study has been on an examination of compliance ofaccounting standard by the selected company, in both theprivate and the public sector. The study also focuses on thestandard setting process of India, USA, UK and the nearbydeveloping countries. Comparative analysis of accountingstandard issued by USA, UK, International accounting committee(IASC) and India has been made, besides the evaluation ofconceptual framework of USA and IASC.

The main findings of the study have been classified in thefollowing broad heads followed by recommendations:

Compliance of accounting standard

Users views on standard d setting in general and on individualstandards.

Standards setting process.

Comparison of standard issued by USA, UK, India andInternational Accounting Standard Committee (IASC).


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GLOBAL SCENARIO

USA- FASBSince 1973, the Financial Accounting Standards Board (FASB) hasbeen the designated organization in the private sector forestablishing standards of financial accounting and reporting.Those standards govern the preparation of financial reports.They are officially recognized as authoritative by the Securitiesand Exchange Commission (Financial Reporting Release No. 1,Section 101 and reaffirmed in its April 2003 Policy Statement)

and the American Institute of Certified Public Accountants (Rule203, Rules of Professional Conduct, as amended May 1973 andMay 1979). Such standards are essential to the efficientfunctioning of the economy because investors, creditors,auditors, and others rely on credible, transparent, andcomparable financial information.

The Securities and Exchange Commission (SEC) has statutoryauthority to establish financial accounting and reportingstandards for publicly held companies under the Securities

Exchange Act of 1934. Throughout its history, however, theCommissions policy has been to rely on the private sector forthis function to the extent that the private sector demonstratesability to fulfill the responsibility in the public interest.

EUROPEAN COUNTRIES:

UK- FRC (FINANCIAL REPORTING COUNCIL)


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The FRC is a unified, independent regulator charged withoverseeing the development, publication and adoption ofaccounting and auditing standards in the UK and is have thefollowing roles:

setting standards for accounting and auditing enforcing and monitoring standards

overseeing the self-regulatory professional bodies

The FRC was originally established in 1990 to provide generalpolicy guidance and promote good financial reporting throughtwo independent subsidiaries: the Accounting Standards Board(ASB), charged with making, amending and withdrawingaccounting standards, and the Financial Reporting Review Panel

(FRRP) that examines apparent departures from statutoryaccounting requirements including applicable accountingstandards.

ASIAN CHINA

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Hua-Ander is one of the first partnership accounting firmsapproved by the Ministry of Finance of the People's Republic of

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Hua-Ander is a full service accounting firm providing diversifiedservices from accounting, audit, taxation to more


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multidisciplinary advisory and transaction services. Ourinternational expertise and experience, facilitated by our strongEnglish communication ability, give us advantages in servicingforeign entities in China. The knowledge and insight into the

practice of local tax and other regulatory requirements enable usto provide practical solutions. High quality of services, personalattention to each client and issue, plus reasonable fee, makesHua-Ander a best cost-effective alternative to the 'Big Four' inChina.

ASIA PACIFICAUSTRALIA

The Australian Accounting Standards Board is a CommonwealthAgency that deals with standard setting in the private and publicsectors in Australia and has its own research and administrativestaff.

The Australian Accounting Standards Board (the Board) is

responsible for developing and issuing AASB AccountingStandards (AASBs) and the care and maintenance of the bodyof Standards. The Board's functions and powers are set out in theAustralian Securities and Investments Commission Act 2001.

Since 2002, the Board has been implementing the strategicdirection from the Financial Reporting Council to adopt


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International Accounting Standards Board (IASB) Standards forapplication to periods beginning on or after 1 January 2005. InJuly 2004, the Board made a number of Standards that applyfrom 2005 and comprise:

Australian equivalents to IASB Standards ancillary AASB Standards supporting the Australian equivalents

to IASB Standards; and

Other AASB Standards that apply to certain types of entities.

The AASB equivalents to IASB Standards comprise:

AASB 1, AASB 2, etc. that are equivalent to IFRS 1, IFRS 2,etc.; and

AASB 101, AASB 102, etc. that are equivalent to IAS 1, IAS 2,etc.


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Documents

Financial Final Project