Accounting Standard

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Accounting is social science and is quite subjective. It is based on Accounting Concepts which give broad guidelines how accounting transactions/events are identified, recognized, classified, summarized, processed and disclosed. To limit these broad guidelines so that some sort of uniformity can be brought and creditworthiness of Financial Statement is build, various Accounting Bodies are empowered to issue guidelines based on Accounting Concepts, many of them are mandatory in nature. These guidelines are limiting the alternatives available in choosing the accounting policy and accounting treatment. These rules are known as Accounting Standards. Accounting Standard is an authoritative statement of how particular types of transaction and other events should be reflected in financial statements. Compliance with accounting standards will normally be necessary for financial statements to give a true and fair view. Each country has empowered accounting body/bodies to issue Accounting Standards. International/National body like IFRS, FASB, ICAI issue such Accounting Standards. Due to globalisation, national Standards are now tends on to similar line of IFRS. The local ASs are knowns as Generally Accepted Accounting Principles. Accounting Standard provide credit to the Accounting system. Many country's law provide legal sanction to follow ASs. In India, Companies Act 1956, sec. 211 asks Board of Director to ensure that all AS issued by ICAI which are mandatory should fully comply. (Sapovadia (talk) 13:35, 4 January 2008 (UTC))

Compliance with Accounting Standard is part of Corporate Governance in India and many other country. OECD has laid down principles to make AS more objective and reliable. As per OECD, Accounting standards are methodologies and disclosure requirements for the preparation and presentation of financial statements. Accounting standards are usually developed within the institutional and professional framework of a country, and promulgated by regulatory or professional accountancy bodies. Standards can also be backed by ethical standards issued by an accountancy body that provide for professional sanctions against members in the event of non-compliance. Accounting standards may also be developed in harmony with, or as an adaptation of, an internationally recognized set of benchmark standards such as International Accounting Standards (as promulgated by the International Accounting Standards Committee), or the U.S. GAAP (General Accepted Accounting Principles as promulgated by the Financial Accounting Standards Board in the United States of America) or Indian GAAP in India. US GAAP is rule based while Indian GAAP is principle based. (Sapovadia (talk) 13:44, 4 January 2008 (UTC))