Accounting is the art and science of recording, classifying, grouping and presenting the economic transactions undertaken by a business entity in monetary terms for a given period of time. All the business transactions are recorded in terms of money and classified according to a particular policy of the business entity to present the financial data into structured information for use of various stakeholders of the business entity. These financial information structures are generally known as Balance Sheet, Profit & Loss Statement, Cash Flow & Fund Flow etc, and disclose the financial results of a particular period generally one financial year to all stakeholders like central govt, state govt, banks, shareholders, lenders, debenture holders, tax authorities, employees, suppliers, customers and regulatory agencies.
Audit of accounts of a business entity certifies that the financial information presented by the entity before its stakeholders is correct, complete, trustworthy and discloses all material facts that may hamper the trustworthiness of it at some later stage when some action or decision has been taken on the basis of such information duly certified by a competent person like chartered accountant, cost accountant, company secretary, banker or any other public authority.
Therefore in short certification of any financial information of any person or business entity is wholly based on the financial books n records kept & accounting policy followed by the business entity, that may differ from organization to organization, industry to industry and even country to country and the financial reports may depict diverse non-reconciled information when taken together by the public authority whether as industry wise, product wise, service wise, geographical area wise or on any other method.
To make the financial information reliable, evident, trust worthy and comparable, it is essential that govt make uniform accounting and auditing policies, reporting formats etc under one separate law and separate law can be made for major industries as well.
Accordingly, all the Accounting Standards issued by ICAI, Cost Accounting Standards issued by ICAI and Secretarial Standards issued by ICSI should be subsumed into one law and issued by govt to be followed by all whosoever is required to report any financial transactions to any stakeholder in public or govt authority.
Reporting Formats of Balance Sheet, Profit & Loss, Cash Flow, Fund Flow etc by whatever name issued under Companies Act, Banking Companies, Electricity Companies, Insurance Companies, Govt Companies, Statutory Corporations, Public Charitable Societies, Cooperative Societies etc should be transferred to separate law to make it applicable to all.
All Taxation and Public Revenue Laws like Income Tax, Wealth Tax, trustworthy Central Excise, Service Tax, VAT, Stamp Duty, Property Tax etc should be amended to recognize the uniform accounting & auditing policy and levy tax or duty accordingly. It will make the Tax Audit Report comprehensive, in trustworthy for all authorities.
Audit & Certification required under any law should be specially designed for the purpose, based on the financial records & reports of the client whether audited or not, reconciled with financial records. Auditor must have the prescribed qualifications, membership, practice certificate and bound by specific accounting & auditing rules applicable to such audit.
All diverse reporting formats, rules, policies, discretionary powers of courts, tribunals etc under various economic & business laws must be done away with and one financial policy for all business entities should be enforced to make all financial reports identical and comparative. We don't need to copy western policies blindly but need to make identical comprehensive economic policies of our own.