STANDARDS SETTING PROCESS

STANDARDS SETTING PROCESS

• The Institute of Chartered Accountants of India (ICAI), being a premier accounting body in the country, took upon itself the leadership role by constituting the Accounting Standards Board (ASB) in 1977. 
• The ICAI has taken significant initiatives in the issuing of Accounting Standards to ensure that the standard-setting process is fully consultative and transparent. The ASB considered the International Accounting Standards (IASs)/ International Financial Reporting Standards (IFRSs) while framing Indian Accounting Standards (ASs) and tried to integrate them, in the light of the applicable laws, customs, usages and business environment in the country. 
• The composition of ASB includes representatives of industries (namely, ASSOCHAM, CII, FICCI), regulators, academicians, government departments, etc. Although ASB is a body constituted by the Council of the ICAI, it (ASB) is independent in the formulation of accounting standards and Council of the ICAI is not empowered to make any modifications in the draft accounting standards formulated by ASB without consulting with the ASB.
•  It may be noted that ASB is a committee under Institute of Chartered Accountants of India (ICAI) which consists of representatives from government department, academicians, other professional bodies viz. icsi, icai, representatives from ASSOCHAM, CII, FICCI, etc. 
• National Advisory Committee on Accounting Standards (NACAS) recommend these standards to the Ministry of Corporate Affairs (MCA). MCA has to spell out the accounting standards applicable for companies in India. 

The standard-setting procedure of Accounting Standards Board (ASB) can be briefly outlined as follows:

•  Identification of broad areas by ASB for formulation of AS. 
•  Constitution of study groups by ASB to consider specific projects and to prepare preliminary drafts of the proposed accounting standards. The draft normally includes objective and scope of the standard, definitions of the terms used in the standard, recognition and measurement principles wherever applicable and presentation and disclosure requirements. 
•  Consideration of the preliminary draft prepared by the study group of ASB and revision, if any, of the draft on the basis of deliberations. 
•  Circulation of draft of accounting standard (after revision by ASB) to the Council members of the ICAI and specified outside bodies such as Ministry of Corporate Affairs (DCA), Securities and Exchange Board of India (SEBI), Comptroller and Auditor General of India (C&AG), Central Board of Direct Taxes (CBDT), Standing Conference of Public Enterprises (SCOPE), etc. for comments. 
•  Meeting with the representatives of the specified outside bodies to ascertain their views on the draft of the proposed accounting standard. 
•  Finalisation of the exposure draft of the proposed accounting standard and its issuance inviting public comments. 
•  Consideration of comments received on the exposure draft and finalisation of the draft accounting standard by the ASB for submission to the Council of the ICAI for its consideration and approval for issuance. 
•  Consideration of the final draft of the proposed standard and by the Council of the ICAI, and if found necessary, modification of the draft in consultation with the ASB is done. 
•  The accounting standard on the relevant subject (for non-corporate entities) is then issued by the ICAI. For corporate entities the accounting standards are issued by The Central Government of India.