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India India is included in the IFAD GAAP Convergence Studies National Professional Organisation Website: Institute of Chartered Accountants of India Response to IFAC Member Body Survey on Standard Setting and Regulation World Bank ROSC Accounting and Auditing Report Update for July 2007 Update for October 2006 Update for April 2006 Update for March 2006 Update for April 2005 Update for April 2004 Update for January 2004 Update for April 2003 Update for July 2002 Update for April 2002 Update for January 2002 Update for October 2001 Update for July 2001 Update for January 2001 Update for October 2000 New Delhi: Mumbai: July 2007 Update India plans to converge its GAAP with IFRSs The Council of the Institute of Chartered Accountants of India has announced a plan to converge Indian Accounting Standards with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board. However, the ICAI noted that it may make modifications to IFRSs to reflect "the Indian conditions". The new standards will be effective for accounting periods beginning on or after 1 April, 2011. They would be required for all listed companies as well as banks, insurance companies, and large-sized entities. Government approval of the plan is required. Click for IASB Press Release (PDF 268k). October 2006 Update India is studying full adoption of IFRSs The Institute of Chartered Accountants of India (ICAI) has set up a task force to explore the possibility of adopting all International Financial Reporting Standards in full, without modification, as Indian standards. The 11-member task force is chaired by S C Vasudeva, chairman of ICAI's accounting standard board. It will develop a concept paper on adoption of IFRSs in India. Currently, many ICAI standards reflect modifications of IFRSs. The task force was announced in the October 2006 message to members from the President of the ICAI, T N Manoharan: In the globalised economic scenario, several multinational companies are establishing subsidiaries in India and many Indian companies are forming subsidiaries abroad. Flow of investments in the international scene clearly indicates that the stakeholders are spread across the globe. As the geographical barriers are vanishing, e-commerce is enlarging, and as raising of capital in foreign markets is increasing, the need for examining the issues relating to convergence of Indian Accounting Standards with International Accounting Standards is assuming greater significance. We are in touch with the IASB in this regard besides considering this issue internally. Recently, a task force has been constituted to consider the challenges involved and to prepare a road map for this purpose. April 2006 Update Revised Accounting Standard (AS) 15 on Employee Benefits The Institute of Chartered Accountants of India (ICAI) has specified that the Revised AS 15 Employee Benefits will become mandatory for accounting periods commencing on or after 1 April, 2006. The Revised AS 15 reflects limited revisions to the existing standard, including the following: Applicability The revised AS 15 is applicable in its entirety to all Level I enterprises (see the January 2004 Update below for definition of Levels I, II, and III). For Levels II and III enterprises whose average number of persons employed is more than 50 during the year (referred as category B), AS 15 will apply in its entirety, except for the following: Recognition and measurement of short-term accumulating compensated absences which are non-vesting. Discounting of the amount of defined contribution and termination benefits which fall due for a period of more than 12 months after the balance sheet date. The elaborate recognition and measurement principles and disclosures relating to defined benefit plans and other long-term employee benefits. However, such enterprises should actuarially determine and provide for such liability based on the Projected Unit Credit Method for which the discount rate should be determined with reference to market yields at the balance sheet date on government bonds. Further, disclosure should be made in respect of the actuarial assumptions as provided in AS 15. In respect of enterprises which employed less than 50 people during the year (referred as category C), they may calculate and account for the accrued liability under defined benefit plans and other long-term benefit plans by some other rational method on the assumption that such benefits are payable to all employees at the end of the year. Accordingly, it is not necessary to determine the liability based on the actuarial method. In case of a change in the status of an enterprise from category A to B/C or from category B to C, the respective exemptions as specified above would not apply for a period of two consecutive years. Further, in the first year in respect of which the change becomes applicable, the corresponding previous year's figures need not be given for the disclosures. Termination Benefits Where an enterprise incurs expenditure in respect of termination benefits on or before 31 March, 2009, the enterprise may choose to follow the accounting policy of deferring such expenditure over its pay-back period. However, expenditure so deferred cannot be carried forward beyond accounting period commencing on or before 31 March, 2010. Disclosures AS 15 has a now mandated additional disclosure to enable users to evaluate the nature of defined benefit plans and the financial effects thereof during the period. Further, disclosure is also required of the reconciliation of the opening and closing balances of the present value of defined benefit obligations and the fair value of the plan assets. Finally, specific assertions are also required with regard to actuarial assumptions which are made and other related matters. An enterprise availing exemption as category B or C, as the case may be, should disclose the fact. An enterprise under category C should additionally disclose the method used to calculate and provide for the accrued liability. March 2006 Update India moving to align its GAAP with IFRSs The Prime Minister of India Manmohan Singh has announced that his government will introduce comprehensive new company legislation that will include aligning Indian accounting standards with IFRSs. The new law the existing 50-year-old companies law with the objective of promoting greater transparency and efficient governance, the Prime Minister said. April 2005 Update Revised Accounting Standard 15 on Employee Benefits The Institute of Chartered Accountants of India (ICAI) has issued Revised Accounting Standard (AS) 15 Employee Benefits. AS 15 prescribes accounting and disclosure for all employee benefits except employee share-based payments. The effective date has not yet been specified. The Revised AS 15 identifies four categories of employee benefits and prescribes the accounting for each similarly to IAS 19: short-term employee benefits, including paid annual leave, profit sharing and bonuses payable within 12 months of the end of the period, and non-monetary benefits for current employees; post-employment benefits including gratuity, pension, other retirement benefits, life insurance, and medical care; other long-term employee benefits, including long-service leave or sabbatical leave, long-term disability benefits and compensation payable beyond 12 months after the end of the period; and termination benefits. Treatment of inter-divisional transfers The ICAI has issued an announcement that states that the recognition of inter-divisional transfers within an enterprise as sales is an inappropriate accounting treatment and is inconsistent with Accounting Standard (AS) 9, Revenue Recognition. In case of inter-divisional transfers, risks and rewards remain within the enterprise. Also there is no consideration from the point of view of the enterprise as a whole. Therefore, the criteria for revenue recognition are not fulfilled. April 2004 Update The Institute of Chartered Accountants of India (ICAI) has amended Accounting Standard 26 on Intangible Assets (AS 26) to exclude terminal benefits from its scope. Terminal benefits are defined as employee benefits payable as a result of either (a) an enterprise's decision to terminate the employee's employment before the normal retirement date or (b) an employee's decision to accept voluntary redundancy in exchange for such benefits. The limited revision was made because Indian Industries claimed to be in a disadvantageous position while passing through a restructuring phase because AS 26 had required that all such payments be charged off when incurred. The Indian Industries noted that termination benefits are excluded from the scope of IAS 38 Intangible Assets, which is the corresponding International Accounting Standard to AS 26, and instead are incorporated in IAS 19 Employee Benefits, which corresponds to AS 15 Accounting for Retirement Benefits in the Financial Statements of Employers. Because AS 15 is currently under revision, the ICAI decided to amend the scope of AS 26. Accordingly, the treatment of terminal benefits will be dealt with by AS 15 when revised. The limited revision to AS 26 is effective for accounting periods commencing on or after 1 April 2003, the date from which AS 26 had come into effect. January 2004 Update The Institute of Chartered Accountants of India (ICAI) has issued the following Accounting Standard: Accounting Standard 29 on Provisions, Contingent Liabilities and Contingent Assets The objective of the Standard is to ensure that appropriate recognition criteria and measurement bases are applied to provisions and contingent liabilities and that sufficient information is disclosed in the notes to the financial statements to enable the users to understand their nature, timing and amount. Further, the Standard seeks to lay down appropriate accounting principles for contingent assets. Under AS 29, a provision should be recognised when: an enterprise has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. If those conditions are not met, a provision should not be recognised. Further, an enterprise should not recognise a contingent liability or a contingent assets. AS 29 is effective for accounting periods commencing on or after 1 April 2004 for specified categories of enterprises. Applicability of Accounting Standards The Council of the Institute of Chartered Accountants of India has decided the following scheme for applicability of Accounting Standards to Small and Medium Sized Enterprises (SMEs). This scheme comes into effect in respect of accounting periods commencing on or after 1 April 2004: For the purpose of applicability of Accounting Standards, enterprises are classified into three categories, viz., Level I, Level II and Level III. Level II and Level III enterprises are considered as SMEs. Level I enterprises are required to comply fully with all the accounting standards. Level II and Level III enterprises will have to follow the recognition and measurement principles stated in the individual Accounting Standards. Relaxations are provided only with regard to disclosure requirements to SMEs. Accordingly, Level II and Level III enterprises are fully exempted from certain accounting standards which are primarily disclosure Standards. The exemptions/relaxations are provided by modifying the applicability portion of the relevant existing Accounting Standards. Level I Enterprises are those which fall in any one or more of the following categories, at any time during the accounting period: Enterprises whose equity or debt securities are listed whether in India or outside India. Enterprises that are in the process of listing their equity or debt securities as evidenced by the board of directors' resolution. Banks including c-operative banks. Financial institutions. Enterprises carrying on insurance business. All commercial, industrial, and business reporting enterprises whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 500 million. All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of Rs. 100 million at any time during the accounting period. Holding and subsidiary enterprises of any one of the above at any time during the accounting period. Level II Enterprises are not Level I enterprises but those who fall in any one or more of the following categories: All commercial, industrial, and business reporting enterprises, whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 4 million but does not exceed Rs. 500 million. All commercial, industrial and business reporting enterprises having borrowings, including public deposits, in excess of Rs. 10 million but not in excess of Rs. 100 million at any time during the accounting period. Holding and subsidiary enterprises of any one of the above at any time during the accounting period. Level III Enterprises are those that are neither Level I nor Level II. April 2003 Update The following revised Accounting Standards have been issued by the Institute of Chartered Accountants of India (ICAI): The Effects of Changes in Foreign Exchange Rates (AS 11). The revised AS 11 is effective for accounting periods commencing on or after 1 April 2004. The following are the major differences between the old and the revised AS 11: The old AS 11 required exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets, which were carried in terms of historical cost to be adjusted in the carrying amount of the respective fixed assets. The revised Standard adopts the benchmark treatment in IAS 21 that requires all exchange differences to be recognised as expense/revenue in the current period. The revised Standard, in line with IAS 21, requires classification of foreign operations as those that are part of the enterprise (termed integral foreign operations) and those that are largely independent (termed non-integral foreign operations). The financial statements of the foreign operations, which are integral, should be translated by using the temporal method that involves application of a combination of historical and closing rates. In translating the financial statements of a non-integral foreign operation, the assets and liabilities, both monetary and non-monetary, should be translated at the closing rate, items of income and expenditure should be translated at the exchange rates at the dates of the transactions and all resulting exchange differences should be accumulated in a foreign currency translation reserve until the disposal of the net investment. The revised Standard specifically deals with foreign exchange contracts entered into for the purpose of trading or speculation, which were not specifically dealt with in the old AS 11. Accounting for Investments (AS 13). The ICAI has revised AS 13 by extending its non-applicability to Venture Capital Funds. This is effective for accounting periods commencing on or after 1 April 2002. Applicability of Accounting Standards to c-operative Societies. The ICAI has clarified that the Accounting Standards shall apply to financial statements of c-operative societies that (a) carry on commercial, industrial, or business activities and (b) are subject to the attest functions of the members of the ICAI. July 2002 Update The following Accounting Standards have been issued by the Institute of Chartered Accountants of India (ICAI): Accounting Standard on Impairment of Assets (AS 28) The Standard is effective for accounting periods commencing on or after 1 April 2004 for listed companies and for unlisted companies whose turnover exceeds Rs. 500 million. It is effective one year later for other companies. The Standard prescribes the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount. The Standard does not apply to inventories, assets arising from construction contracts, financial assets including investments, and deferred tax assets; separate standards address impairment for those assets. The Standard applies to assets whether carried at cost or at revalued amounts. Revised Accounting Standard on Construction Contracts (AS 7) The Standard prescribes the recognition criteria and practical guidance to determine when a contractor should recognise contract revenue and contract costs as revenue and expenses in the statement of profit and loss. When the outcome of a construction contract can be estimated reliably, the percentage-of-completion method should be used. The Standard will come into effect for accounting periods commencing on or after 1 April 2003. Discontinuing Operations (AS 24) The ICAI has decided to make the Accounting Standard on Discontinuing Operations (AS 24) mandatory for accounting periods commencing on or after 1 April 2004 for listed companies and for unlisted companies whose turnover exceeds Rs. 500 million. It will take effect one year later for other companies. April 2002 Update The following Accounting Standards have been issued by the Institute of Chartered Accountants of India: AS 24, Accounting Standard on Discontinuing Operations AS 24 enhances the ability of the users of the financial statements to make projections of an enterprise's cash flows, earnings-generating capacity, and financial position by segregating information about discontinuing operations from information about continuing operations. AS 24 does not establish any recognition and measurement principles. Rather, it requires that an enterprise follow recognition and measurement principles established in other Accounting Standards. This Standard is recommendatory in nature at present. AS 25, Accounting Standard on Interim Financial Reporting The objective of AS 25 is to prescribe the minimum contents of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed financial statements for an interim period. If an enterprise is required or elects to prepare and present an interim financial report, it should comply with this Standard. Effective for accounting periods commencing on or after 1 April 2002. AS 26, Accounting Standard on Intangible Assets This Standard came into effect in respect of expenditure incurred on intangible items during accounting periods commencing on or after 1 April 2002 and is mandatory in nature from that date for the following: (i) Enterprises whose equity or debt securities are listed on a recognised stock exchange in India, and enterprises which are in the process of issuing equity or debt securities that will be listed on a recognised stock exchange in India. (ii) All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds Rs. 500 million. In respect of all other enterprises, AS 26 takes effect in accounting periods commencing on or after 1 April 2004 and is mandatory in nature from that date. From the date that AS 26 becomes mandatory for the concerned enterprises, the following stand withdrawn: (i) Accounting Standard (AS) 8 on Accounting for Research and Development; (ii) Accounting Standard (AS) 9 on Depreciation Accounting with respect to the amortisation (depreciation) of intangible assets; and (iii) Accounting Standard (AS) 10 on Accounting for Fixed Assets - certain relevant portions. AS 26 addresses the accounting for intangible assets that are not dealt with specifically in other Accounting Standards. It requires an enterprise to recognise an intangible asset if, and only if, certain criteria are met. AS 26 also specifies how to measure the carrying amount of intangible assets and requires disclosures about intangible assets. AS 27, Accounting Standard on Financial Reporting of Interests in Joint Ventures AS 27 sets out principles and procedures for accounting for interests in joint ventures and reporting of joint venture assets, liabilities, income, and expenses in the financial statements of the venturers and investors. AS 27 is mandatory for both the separate financial statements and the consolidated financial statements prepared by an enterprise. Effective for accounting periods commencing on or after 1 April 2002. January 2002 Update The following exposure drafts of Accounting Standards have been issued by the Institute of Chartered Accountants of India: Exposure Draft on proposed Accounting Standard on Intangible Assets The objective of the Standard is to prescribe the accounting treatment for intangible assets. The Standard lays down the criteria for recognition of an intangible asset, specifies how to measure intangible assets, and prescribes certain disclosures. It lays down the rules for amortisation of intangible assets and application of an impairment test. On the introduction of this Standard, Accounting Standard on Research and Development (AS-8) would be withdrawn. Accounting treatment of expenditure on research and development and accounting for self-generated intangible assets are dealt with in the Standard. The effective date of the Standard is to be decided later. Exposure Draft on proposed Accounting Standard on Financial Reporting of Interests in Joint Ventures The objective of the Standard is to set out principles and procedures for accounting for interests in joint ventures and reporting of joint venture assets, liabilities, income, and expenses in the financial statements of venturers and investors. The Standard is to be applied regardless of the structures or forms under which the joint venture activities take place. The requirements relating to accounting for joint ventures in consolidated financial statements are to be applied only where consolidated financial statements are prepared and presented by the venturer. The effective date of the Standard is to be decided later. Exposure Draft on proposed Accounting Standard on Interim Financial Reporting The objective of the Standard is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in complete or condensed financial statements for an interim period. The Standard will come into effect in respect of accounting periods commencing on or after 1 April 2002. If an enterprise is required or elects to prepare and present an interim financial report (either a set of complete financial statements or a set of condensed financial statements), it should comply with this Standard. Exposure Draft on proposed Accounting Standard on Impairment of Assets The objective of the proposed Standard is to prescribe the procedures that an enterprise applies to ensure that its assets are carried at no more than their recoverable amount. The proposed Standard states that if the carrying amount of an asset exceeds the amount to be recovered through use or sale of the asset, then the asset is described as impaired, and the enterprise must recognise an impairment loss. The proposed Standard also specifies when an enterprise should reverse an impairment loss and prescribes certain disclosures for impaired assets. This proposed Standard does not apply to inventories, assets arising from construction contracts, deferred tax assets, or investments because existing Accounting Standards already contain specific requirements for recognising and measuring impairment for those assets. The effective date of the Standard is to be decided later. October 2001 Update Recent standard setting activity of the Institute of Chartered Accountants of India: Accounting Standard on Accounting for Investments in Associates in Consolidated Financial Statements (AS 23). The ICAI has issued AS 23 on Accounting for Investments in Associates in Consolidated Financial Statements. The Standard comes into effect in respect of accounting periods commencing on or after 1 April 2002. An enterprise that presents consolidated financial statements should account for investments in associates in the consolidated financial statements in accordance with this Standard. Exposure draft on proposed limited revision to Accounting Standard AS 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. AS 5 is under revision. Until AS 5 is completely revised, a limited revision to AS 5 is proposed. A change in accounting policy resulting from adoption of an Accounting Standard should be accounted for in accordance with the specific transitional provisions, if any, contained in that Standard. Exposure draft on proposed Accounting Standard AS 7, Construction Contracts. The objective of the proposed Standard is to prescribe the accounting treatment of revenue and costs associated with construction contracts. The present AS 7 gives the option to use either the percentage of completion method or the completed contract method. The proposed Standard states that when the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract should be recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. Proposed effective date: accounting periods beginning on or after 1 April 2002. Exposure draft on proposed Accounting Standard on Discontinuing Operations. The objective of the proposed Standard is to establish principles for reporting information about discontinuing operations, thereby enhancing the ability of users of financial statements to make projections of an enterprise's cash flows, earnings-generating capacity, and financial position by segregating information about discontinuing operations from information about continuing operations. The Standard describes the initial disclosure event on occurrence of which the enterprise should estimate the net realisable value of the assets attributable to the discontinuing operation and if it is lower than the carrying amount of the assets, recognise the estimated loss. The Standard also lays down the various disclosures required with regard to discontinuing operations. The proposed Standard will come into effect in respect of accounting periods commencing on or after 1 April 2002. July 2001 Update The Preface to the Statements of Accounting Standards, issued in January 1979, says (paragraph 2.2): The Institute is one of the Members of the International Accounting Standards Committee (IASC) and has agreed to support the objectives of IASC. While formulating the Accounting Standards, ASB will give due consideration to International Accounting Standards issued by IASC and try to integrate them, to the extent possible, in the light of conditions and practices prevailing in India. Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) since the beginning of the calendar year 2001 are as follows: AS 19, Accounting Standard on Leases. The Standard prescribes, for lessees and lessors, the appropriate accounting policies and disclosures in relation to finance leases and operating leases. Whether a lease is a finance lease or an operating lease will depend on the substance of the transaction rather than its form. At the inception of a finance lease, the lessee has to recognise the lease as an asset (and accordingly provide for depreciation) and a liability. The Standard comes in to effect in respect of all assets leased during accounting periods commencing on or after 1 April 2001 and is mandatory in nature. AS 20, Accounting Standard on Earnings Per Share (EPS). The objective of the Standard is to lay down principles for the determination and presentation of EPS, to enable comparison of performance amongst different enterprises. The Standard would apply to all enterprises whose equity shares or potential equity shares are listed on a recognised stock exchange in India and would be mandatory in nature in respect of accounting periods commencing on or after 1 April 2001. Enterprises which have neither listed equity shares or potential equity shares but which disclose EPS, should calculate and disclose EPS in accordance with this Standard. In consolidated financial statements, the information required by this Standard should be prepared on the basis of consolidated information. At present, all companies are required to report their EPS as part of their financial statements prepared in accordance with Schedule VI to the Companies Act, 1956. AS 21, Accounting Standard on Consolidated Financial Statements. An enterprise that presents consolidated financial statements should prepare and present its financial statements in accordance with this Standard. Consolidated financial statements are prepared by a parent company to provide financial information about the economic activities of its group as also to show the economic resources controlled by the group, the obligations of the group and the results the group achieves with the resources it has. The Standard comes into effect in respect of accounting periods commencing on or after 1 April 2001. AS 21 differs from IAS 27 in that it does not make it mandatory for an enterprise (group) to prepare consolidated financial statements. It is expected that the Securities Exchange Board of India will require all listed companies to present consolidated financial statements for the year ending 31 March 2002. AS 22, Accounting Standard on Accounting for Taxes on Income. The Standard comes into effect in respect of accounting periods commencing on or after 1 April 2001. The Standard is mandatory: A. in respect of accounting periods commencing on or after 1 April 2001 for: i. Companies whose debt or securities are listed on a recognised stock exchange in India and enterprises that are in the process of issuing equity or debt securities that will be listed on a recognised stock exchange in India; and ii. All enterprises in a group where the parent presents consolidated financial statements, if the Standard is mandatory for any enterprise of that group in terms of (i) above; B. in respect of accounting periods commencing on or after 1 April 2002 for companies not covered by the above; C. in respect of accounting periods commencing on or after 1 April 2003 for all other enterprises, including firms, trusts, and associations of persons. The objective of AS 22 is to prescribe the accounting treatment for taxes on income including the determination of the amount of the expense or savings related to taxes on income in respect of an accounting period and the disclosure of such an amount in the financial statements. For the purposes of this Standard, taxes on income include all domestic and foreign taxes that are based on taxable income and the tax effect of timing differences (deferred taxation). AS 22 differs from IAS 12. Whereas IAS 12 recognises and measures deferred income taxes based on temporary (book-tax differences in balance sheet items), AS 22 recognises and measures deferred taxes based on timing differences (book-tax differences in items reported in the income statement). Exposure drafts of Accounting Standards ICAI since the beginning of 2001 are as follows: Exposure draft on proposed Accounting Standard on Accounting for Investments in Associates in Consolidated Financial Statements. The objective of the Standard is to set out principles and procedures for recognising, in the consolidated financial statements, the effects of the investments in associates on the financial position and operating results of a group. The proposed Standard prescribes the equity method for accounting for investments in an associate in the consolidated financial statements with certain exceptions where the Standard on Accounting for Investments (AS 13) is to be used. An associate is an enterprise in which the investor has significant influence (but not control) and which is neither a subsidiary nor a joint venture of the investor. The proposed Accounting Standard will come into effect in respect of accounting periods commencing on or after 1 April 2002. A separate Accounting Standard on Financial Reporting of Interests in Joint Ventures, is being formulated by the ICAI. Exposure draft on proposed Accounting Standard on Discontinuing Operations. The objective of the Standard is to establish principles for reporting information about discontinuing operations, thereby enhancing the ability of users of financial statements to make projections of an enterprise's cash flows, earnings-generating capacity, and financial position by segregating information about discontinuing operations from information about continuing operations. The proposed Standard is to apply to all discontinuing operations of an enterprise. The proposed Accounting Standard will come into effect in respect of accounting periods commencing on or after 1 April 2002. Exposure draft on Proposed Limited Revision to AS 5, Accounting Standard on Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. It is proposed to make a limited revision to AS 5 whereby a change in accounting policy consequent upon the adoption of an Accounting Standard is to be accounted for in accordance with the specific transitional provisions, if any, contained in that Accounting Standard. January 2001 Update Accounting standards in India are formulated by Accounting Standards Board of the Institute of Chartered Accountants of India. In formulating the standards, ASB will give due consideration to International Accounting Standards issued by IASC and try to integrate them to the extent possible, in the light of the conditions and practices prevailing in India. Recent accounting standards have been issued for the following: AS 16, Borrowing Costs AS 17, Segment Reporting AS 18, Related Party Disclosures AS 19, Leases Exposure Drafts have been issued for the following: Earnings Per Share Consolidated Financial Statements An exposure draft for Income Taxes is under final stages of preparation. October 2000 Update Financial reporting requirements for companies incorporated in India are set out in the Companies Act. An amendment to that Act that took effect 31 October 1998 requires compliance with accounting standards established by a new National Advisory Committee on Accounting Standards (NAC). Accounting standards specified by the Institute of Chartered Accountants of India (ICAI) must be followed until NAC has addressed the issue. The ICAI's Accounting Standards Board also publishes accounting standards. The ASB's policy is to take IAS into consideration in developing its standards. While many of the Indian Accounting Standards conform in most material respects to IAS, those on R&D, foreign exchange, borrowing costs, and business combinations do not. Listing of Indian Accounting Standards at 10 October 2000 and Related International Accounting Standards International Accounting Standards Indian Accounting Standards IAS No. Title of the Standard AS No. Title of the Standard 1 Presentation of Financial Statements 1 Disclosure of Accounting Policies 2 Inventories 2 Valuation of Inventories 4 Depreciation Accounting 6 Depreciation Accounting 7 Cash Flow Statements 3 Cash Flow Statements 8 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. 10 Events after the Balance Sheet Date 4 Contingencies and Events Occurring after the Balance Sheet Date 11 Construction Contracts 7 Accounting for Construction Contracts 14 Segment Reporting 17 Segment Reporting 16 Property, Plant and Equipment 10 Accounting for Fixed Assets 17 Leases 19 Leases 18 Revenue 9 Revenue Recognition 19 Employee Benefits 15 Accounting for Retirement Benefits in the Financial Statements of Employers 20 Accounting for Government Grants and Disclosure of Government Assistance 12 Accounting for Government Grants 21 The Effects of Changes in Foreign Exchange Rates 11 Accounting for the Effects of Changes in Foreign Exchange Rates 22 Business Combinations 14 Accounting for Amalgamations 23 Borrowing Costs 16 Borrowing Costs 24 Related Party Disclosures 18 Related Party Disclosures 25 Accounting for Investments (was withdrawn from 01.01.2001) 13 Accounting for Investments 40 Investment Property (effective 01.01.2001) - Dealt with by Accounting Standard 13   Corresponding IAS 9 has been withdrawn since the matter is now covered by IAS 38 8 Accounting for Research and Development