Earlier we have learned that the Accounting Standards framed by the Accounting Standards Board (ASB) of ICAI, and issued by the Council of ICAI. The ASB will submit the Finalized Exposure Draft of Proposed Accounting Standard to the Council. After consideration of all the comments the Council will request the ASB for further amendments to be done to the Draft, if needed.
And ICAI is not at all a legislative body therefore it has issued the Accounting Standards within the bounds of the laws and local regulations. Later it will be notified by the Ministry of Corporate Affairs for Companies.
How does an Enterprise does knows the applicability of Accounting Standards
An Enterprise can ascertain the answer for the question, whether the Accounting Standards are applicable for it or not by answering the following three questions.
- Does it apply to the Enterprise concerned?
- Does it apply to the Financial Statement concerned?
- Does it apply to the Financial Item concerned? (Here the Financial Item could be an Fixed Asset, Current Asset, etc., which is shown in the Financial Statement of the enterprise).
We will comprehend in detail about the above three point in the next article and this is all about the Overview of Accounting Standards and how an Enterprise can know that the Accounting Standards are applicable.