Framework on Accounting Standards There are two types of Entities: Companies Non Companies
A) Application of AS on Companies • Coverage : All companies are covered under Companies (AS) Rule 2006, applicable from 7th Dec 2006 under CAS rule AS 1 to 29 except 8 are notified AS(NAS). Such Notified AS are recommended by NACAS, a body formed u/s 210, through ammendment in Companies Act 1999. AS : Accounting Standard CAS: Committee of AS NACAS : National Advisory Committee of AS NAS: Notified AS
ii) If Notified AS are not Followed : Following Disclosures are required to be made: • Reasons of Deviation • Effect of Deviation Apart from above disclosure in notes to accounts auditor should qualify his Audit Reports.
iv) Exemption & Relaxations : • Non SMC : No Relaxation / Exemption • SMC : In AS • Full Exemption : 3 ,17 • Partial Exemption : 15 , 18, 19, 25, 28
v) Transfer SMC Non SMC • P.Y. figures need not be Adjusted Non SMC SMC • P.Y Figures without exemption / relexation Note: Amount to be transferred is the same as if there is no transfer.
vi) Meaning ( As per company AS Rules 2006 ) Non SMC : • Listed Company or Companies in the process of Listing. • Listing can be in India Or Outside India • Listing can be of Equity, Preference, Debenture • Banks, Insurance Companies of FIs • Co. whose turnover exceeds Rs 50 Cr in PY • Co. whose Borrowing exceeds Rs. 10 Cr in PY • Holding or Subsidiary of any of above companies.
B) Application of AS on Non Companies • Coverage :All non companies which are Reporting Entities, are covered by AS issued by ICAI. Exception :Reporting Entities in Charitable, Religious activities, not undertaking any Commercial activity are not required to follow AS. (Matter found in Preface to AS)
ii) All AS are mandatory for members of ICAI, and such AS should be followed by entity, for attestation function of members. iii) AS are applicable to General Purpose Financial Statement only. Eg: Balance sheet, P & L A/c, Cash Flow etc.
iv) Types of Entities Level I : No Exemption / Redemption Level II: • Full Exemption : 3 ,17 • Partial Exemption : 15 , 18, 19, 25, 28, 29 Level III: • Full Exemption : 3 ,17, 18, 24 • Partial Exemption : 15 ,19, 25, 28, 29
v) Meaning Level I : • Listed Entities or Entities in the process of Listing. Eg : Mutual Funds • Banks, Entities in Bussiness of Insurance. • Entities whose turnover exceeds Rs 50 Cr in PY • Entities whose Borrowing exceeds Rs. 10 Cr in PY Note: at any time in PY
Level II : • Entities whose turnover exceeds 40 Lakh, upto 50 Cr. • Entities whose Borrowing exceeds Rs 1 Cr, upto 10 Cr. Level III : • Entities which are not in Level I or Level II