Need and Development of Accounting: Practically speaking, in order to eliminate discrepancies between accounting principles and accounting practice, as well as to discover consistency among the numerous underlying principles of accounting. For preserving accounting practice in our nation, we emphasize the Accounting Standards defined by the IASC or IAS (Indian Accounting Standard, based on IASC).
The following are the reasons for establishing the Standards: Need and Development of Accounting
(a) A comparison of two businesses is feasible if they both follow the same principle; otherwise, a meaningful comparison is impossible. For example, if Firm A uses the FIFO technique of stock valuation and Firm B uses the LIFO approach, the comparison between the two businesses becomes meaningless. Only if they both use the same technique of evaluating closing shares is this conceivable.
(b) Businesses are not permitted to preserve and show their accounts in accordance with their own wishes or preferences, and they are unable to make financial statement reports for different interested parties. Only when there is a definite norm for establishing practice is this feasible.
(c) The Accounting Standards acknowledge the notion of equity as it applies to various consumers of accounting information for Need and Development of Accounting such as creditors, investors, and shareholders. Thus, the goal of accounting standards is to achieve uniformity in accounting practice while preparing financial reports, as well as to ensure consistency and accurate comparability of data in financial statements for accounting information consumers. Accounting standards have been developed to provide fairness, uniformity, and openness in accounting practice, as well as to satisfy accounting users.
Accounting Standards’ Goals and Characteristics for Need and Development of Accounting
The following are the goals of the IASC, as stated in its amended agreement and constitution:
To develop and publish Accounting Standards for use in the presentation of financial accounts in the public interest, as well as to promote their international acceptance and use.
(ii) Contribute to the improvement and harmonization of accounting standards and processes governing financial statement presentation.
The remark of. L. Kirkparick, Chairman of the Board of IASC, addressed to the members of the Institute of Chartered Accountants, Ireland, is highly important in terms of the above-mentioned aim I namely, international acceptance and operation. “When we sit at the IASC Board table and in the steering group that develops the standard, we do it in our role as accounting experts, not as auditors,” he says. Whether we are practitioners or not makes no difference.” As a result, ISAC’s set/issued Standards are intended for global adoption.
Need and Development of Accounting
Accounting Standards Development: International Accounting Standards (IAS) are a set of rules that govern how businesses are accounted for.
The International Accounting Standard Committee (IASC) is a body that sets accounting standards throughout the world.
The Institute of Chartered Accountants from ten countries (the United States, Canada, the United Kingdom and Ireland, Australia, France, Germany, Japan, Mexico, and the Netherlands) ratified the constitution for its foundation on June 29, 1973. The company’s headquarters are in London. IAS’s goals are to provide accounting standards that must be followed in the presentation of audited financial statements, as well as to promote their global acceptability.
It also has the role of keeping member entities up to date on new developments and standards by providing exposure draughts on a regular basis. The Institute of Chartered Accountants of India and the Institute of Cost and Works Accountants of India are members of the International Accounting Standards Committee, which goes without saying.
The following are the goals of IASC, as stated in its updated agreement and constitution (November 1982):
To develop and publish accounting standards for use in the presentation of financial accounts in the public interest, as well as to promote their international acceptance and use, and
Contribute to the improvement and harmonization of governing accounting rules and processes relevant to financial statement reporting.
Furthermore, the International Federation of Accountants (IFAC) was established at the IX International Congress of Accountants in October 1977 in order to harmonize accounting, auditing, and reporting practices in an area where the world’s commercial and industrial systems will become increasingly interdependent.
International Accounting Standards Committee (IASC) and International Federation of Accountants (IFAC) formed a working group to codify their connection, which has released a declaration of ‘Mutual Commitments’ in the meanwhile. In practice, this declaration recognizes the IASC as the exclusive entity competent for publishing international accounting standards pronouncements. It was accepted by the IFAC Council in May 1981.
The subject of the Confederation of Asian and Pacific Accountants (CAPA) conference in 1979 was ‘International Cooperation in Accounting,’ in acknowledgment of the universality of accounting and the convergence of efforts of accounting organizations throughout the globe.
In a similar vein, the Financial Accounting Standards Board (FASB) of the United States has produced a series of Statements on the conceptual framework for financial accounting and reporting in order to build the necessary standards.
IASC published International Accounting Standards till January 1, 2004. Some criteria have been removed, while others have been altered.
The standards are:
- IAS 1: Presentation of Financial Statements
- IAS 2: Valuation and Presentation of Inventories
- IAS 7: Cash Flow Statement
- IAS 8: Net Profit or Loss for the Period― Fundamental Errors and Changes in Accounting Policies
- IAS 10: Events occurring after Balance Sheet Date
- IAS 11: Accounting for Construction Contracts
- IAS 12: Accounting for Taxes on Income
- IAS 14: Reporting Financial Information by Segments
- IAS 15: Information reflecting the effects of Changing Prices
- IAS 16: Accounting for Property, Plant and Equipment
- IAS 17: Accounting for Leases
- IAS 18: Revenue Recognition
- IAS 19: Accounting for Retirement Benefits of Employees in the Financial Statements of Employers
- IAS 20: Accounting for Government Grants and Disclosure of Government Assistance
- IAS 21: Accounting for Effects of Changes in Foreign Exchange Rates
- IAS 22: Accounting for Business Combinations
- IAS 23: Capitalizations of Borrowing Costs
- IAS 24: Disclosure of Related Party Transactions
- IAS 26: Accounting and Reporting by Retirement Benefits Plans
- IAS 27: Consolidated Financial Statements and Accounting for Investments
- IAS 28: Accounting for Investments in Associates
- IAS 29: Financial Reporting by Hyperinflationary Economics
- IAS 30: Disclosure of Financial Statement and Banks and Similar Financial Institutions
- IAS 31: Financial Reporting of Interests in Joint Ventures
- IAS 32: Financial Instruments—Disclosure and Presentations
- IAS 33: Earning per Share
- IAS 34: Accounting for Interim Financials Reporting
- IAS 35: Discontinuing Operations
- IAS 36: Impairment of Assets
- IAS 37: Provisions, Contingent Liabilities and Contingent Assets
- IAS 38: Intangible Assets
- IAS 39: Financial Investments—Recognition and Measurement
- IAS 40: Investment Property
- IAS 41: Accounting for Agriculture.