OVERVIEW OF ACCOUNTING STANDARDS (AS)
OVERVIEW OF ACCOUNTING STANDARDS (AS)
Accounting standards put together provides a framework of norms as to recognition,
measurement, Presentation and disclosure of accounting transaction and events on the part of
all enterprises that follow them to ensure comparability and depiction of true and fair view of
the Financial Statements. High quality accounting standards are a prerequisite and important
for a sound Capital Market System. The surge in the cross-border capital raising and Investment
transactions demands formulation of high-quality international accounting standard for
financial reporting worldwide.
The Companies (Indian Accounting Standards) Rules, 2015 (and subsequent amendments to
the Rules) made Ind AS applicable to the specified entities [as stated in section d], leaving AS
[as per the Companies (Accounting Standards) Rules, 2006] applicable to other entities. For
the purpose of applicability of Accounting Standards, enterprises are classified into three
categories, viz., Level I, Level II and Level III. Level II and Level III enterprises are considered as
Level I Enterprises:
• Enterprises whose equity or debt securities are listed whether in India or outside India.
• Enterprises which are in the process of listing their equity or debt securities as evidenced by
the Board resolution in this regard.
• Banks including co-operative banks
• Financial institutions
• Enterprises carrying insurance business
• Enterprises whose turnover exceeds₹50 crores
• Enterprises having borrowings in excess of₹10 crores at any time during the accounting
• Holding companies and subsidiaries of enterprises falling under any one of the categories
Level II Enterprises:
• Enterprises whose turnover exceeds₹1 crore but does not exceed₹50 crores.
• Enterprises having borrowings in excess of₹1 crore but not in excess of₹10 crores at any time
during the accounting period.
• Holding companies and subsidiaries of enterprise falling under any one of the categories
Level III Enterprises:
• Enterprises which are not covered under Level I and Level II.
Accounting standards and their applicability based on three tier classification
Accounting Standards Applicability (Based on the three-tier classification)
AS 3,17,18,24, Not applicable to Level II and Level III enterprises in their
AS 19,20,29 All enterprises but relaxation given to Level I and Level II
enterprises for certain disclosure requirements.
AS 21,23,27 Not applicable to Level II and Level III enterprises
AS 25 Not mandatorily applicable to Level II and Level III enterprises
It is mandatory for on or after 1-4-2011 for all commercial, industrial and business entities
except to a Small and Medium-sized Entity.
However, on and after 1-4-2016 the Companies (Indian Accounting Standards) Rules, 2015
made Ind AS applicable to the specified companies. Accounting standards(AS) are no more
applicable to those specified companies where Ind ASs are applicable.
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