Applicability of Accounting Standards

This query is : Resolved

CA Anand Sarda (Querist)
Follow

09 November 2009 Under Co's Act,1956, it is mandatory for a company to comply with Accounting Standards as per Sec211(3A),
Like wise, do we have such compliance requirement in cooperative societies Act, Acts governing the trusts?

Guest

Guest (Expert)

09 November 2009 yes

In case of preface of accounting standards, they have used the word ENTERPRISE and not REGISTERED COMPANY.

So that accounting standards are applicable to each and every entity.

CA Anand Sarda

CA Anand Sarda (Querist)
Follow

09 November 2009 Dear Rakesh,
Thanks for reply ,
But my question is,
suppose the company is not complying with the accounting standard, then the auditor has to report that as per Sec211(3C), the company has not followed the standards.
Likewise what happens if the trust or cooperative society doesnot follow the standards?

shakuntala chhangani

shakuntala chhangani (Expert)
Follow

10 November 2009 paragraph 3.3.of the "Preface to the statement of accounting standards" provides, inter alia, as below:
"3.3 The Institute will issue the Accounting Standards for use in the presentation of the general purpose financial statements issued to the public by such commercial, industrial or business enterprises as may be specified by the institute from time to time subject to the attest function of the members."
in view of the above, the Accounting Standards issued by the Institute shall apply in respect of financial statements of co-operative societies, which carry on commercial, industrial or business activities, and are subject to the attest function of the members of the Institute. the Accounting Standards made mandatory by the Institute, as specified in the respective Standards or made mandatory by separate announcements, are also mandatory in respect of co-operative societies.
for removal of doubts, ICAI has even clarified that even if a very small proportion of the activities of a co-operative society is considered to be commercial, industrial or business in nature, then it can not claim exemption from application of Accounting Standards. The Accounting Standards would apply to all its activities including those which are not commercial, industrial or business in nature.
it is reiterated that mandatory status of an Accounting Standard implies that it will be the duty of the members of the Institute to examine whether the Accounting Standard is complied with in the presentation of financial statements covered by their audit. In the event of any deviation from the Accounting Standard, it will be their duty to make adequate disclosure in their reports so that all the suers of financial statements may be aware of such deviation.
I hope i have replied your query in the best possible way i m aware of. thanks n regards

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now