Page 44 - CA_ELG_Volume I_ELG-Sample

1.34 Theoretical Framework Principles and Practices of Accounting Paper 1

1.20.4 Formulation of Accounting Standards

Figure 1 represents the process for formulating Accounting Standards.

Identification of area

Constitution of study group

Preparation of draft and its
circulation

Ascertainment of view of
different bodies on draft

Finalisation of
Exposure Draft (ED)

Comments received on ED

Modification of the draft

Issue of AS

Fig. 1.13 Formulation of Accounting Standards

1.21 Indian Accounting Standards (Ind AS)

The reason for issuance of Indian Accounting Standards are discussed in the following
sections.

1.21.1 Convergence towards Global Standards

Each country has its own set of rules and regulations for accounting and financial
reporting. Analysts and investors throughout the world would like to compare finan-
cial statements based on similar accounting standards. This has led to the growing
support for accounting standards that are accepted internationally. The harmoni-
sation of financial reporting standards will increase the investor’s confidence level
on the information relied by them to make decisions and assess their risk, thereby
resulting in lower errors of judgement.

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