The Accounting Standards Board determines the broad areas in which accounting standards are to be formulated and the priority which is to be given to each one of the selected areas. In the task of preparation of accounting standards. Accounting Standards Board is assisted by different study groups constituted to consider specific subjects. In the formation of study groups, care is taken that there is wide participation by members of the Institute of Chartered Accountants and other bodies. A dialogue
is held with the representatives of the Government, the public sector undertakings, industries and other organisations to ascertain their views. Then, an exposure draft of the proposed accounting standard is prepared and issued for comments by the members of the Institute and the public at large. The draft is sent to various outside bodies like FICCI, ASSOCHAM, SCOPE, C&AG, ICWA1, 1CSI, CBDT etc. for their views.
The draft includes the following points :
(i) A statement of concepts and fundamental accounting principles relating to the standard,
(ii) Definitions of the terms used in the standard.
(iii) The manner in which the accounting principles have been applied for formulating the standard.
(iv) The presentation and disclosure requirements in complying with the standard. .
(v) Class of enterprises to which the standard will apply,
(vi) Date from which the standard will be effective.
After taking into the consideration the comments received from different quarters, the draft of the proposed standard is finalized by the Accounting Standards Board and submitted to the Council of the Institute of Chartered Accountants of India for the latter’s approval. The Council considers the draft and if found necessary, modifies it in consultation with the Accounting Standards Board. Finally, the accounting standard is issued under the authority of the Council. Initially, the standard is made recomendatory and after some time it is made mandatory.
