by The procedure for issuing Indian Accounting Standards (Ind AS) in India is a well-defined process that ensures the standards are developed in line with global best practices while addressing the specific needs of the Indian economy. The procedure involves several steps, and the main body responsible for this is the Institute of Chartered Accountants of India (ICAI), along with the Ministry of Corporate Affairs (MCA).
- Formation of Advisory Committees
The process of formulating Ind AS begins with the formation of various committees by the Accounting Standards Board (ASB) of ICAI. These committees include professionals, experts, and government representatives who provide input into the standard-setting process. The key committee involved is the Accounting Standards Board (ASB), which works with experts to prepare drafts of the standards.
- Study of International Standards (IFRS)
ICAI conducts a thorough study of International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The objective is to align the Indian standards with IFRS, ensuring consistency and comparability in financial reporting. However, ICAI may make certain modifications to the IFRS, considering the specific needs of the Indian economy, taxation laws, and business practices.
- Drafting of Standards
Once the committees have reviewed IFRS, they begin drafting the relevant Indian accounting standards. During the drafting process, careful attention is paid to ensuring that the standards are applicable to the local business environment. The drafted standards may include modifications to IFRS or adopt them as they are, depending on the specific needs of India.
- Exposure Draft
After the draft standards are prepared, they are released as Exposure Drafts for public comment. These exposure drafts are widely circulated to professionals, industry bodies, companies, and the general public. The aim is to obtain feedback from stakeholders on the proposed standards, which may highlight potential issues, concerns, or areas needing clarification.
- Public Comments and Feedback
The public is given an opportunity to submit comments on the Exposure Draft within a specified time frame. Stakeholders such as businesses, auditors, regulators, financial institutions, and other professional bodies provide feedback on the draft. This feedback is crucial as it helps ensure the standards are practical, relevant, and aligned with the economic realities of India.
- Revised Drafts and Deliberation
After receiving the public comments, the ASB reviews and deliberates on the feedback. The draft standards may be revised based on the comments received. This stage often involves discussions, revisions, and further consultations to fine-tune the standards.
- Approval by ICAI
Once the revised standards are finalized, they are submitted to the Council of ICAI for approval. The Council of ICAI is responsible for overseeing the standard-setting process and ensuring that the standards meet the required criteria. Upon approval, the standards are ready for issuance.
- Notification by Ministry of Corporate Affairs (MCA)
After ICAI’s approval, the standards are sent to the Ministry of Corporate Affairs (MCA) for notification. The MCA, being the regulatory body overseeing corporate governance and financial reporting in India, officially issues the standards in the form of notification in the official gazette. This makes the standards legally binding on specified entities, such as listed companies, large unlisted companies, and others that meet the prescribed criteria.
- Implementation and Compliance
Once notified, the standards are implemented and enforced. Companies that are required to follow Ind AS must begin adopting these standards in their financial reporting. Transition provisions are often included to allow entities time to adjust to the new accounting standards. Companies may also receive guidance from ICAI through training programs and publications on how to implement Ind AS effectively.
- Ongoing Review and Updates
The process for issuing Ind AS does not stop with their implementation. ICAI and MCA continuously monitor the effectiveness of these standards and make revisions as necessary. These revisions are based on changes in global standards, emerging accounting issues, and evolving business practices. Regular updates ensure that Ind AS remains relevant and consistent with IFRS.
