Important Accounting Standards Every CA Should Know
In today’s complex regulatory environment, understanding important accounting standards is critical for every Chartered Accountant (CA). Whether you’re preparing financial statements, conducting audits, or filing tax returns, these standards form the backbone of compliance and transparency in India.
This blog breaks down key accounting standards issued by ICAI and notified by the Ministry of Corporate Affairs (MCA) — in simple terms, with legal references, tables, and tips for practical application.
What Are Accounting Standards?
Accounting Standards (AS) are written policy documents that set out the principles for recognition, measurement, presentation, and disclosure of accounting transactions. In India, we follow:
- AS (Accounting Standards) for small and medium enterprises (non-Ind AS)
- Ind AS (Indian Accounting Standards) for companies notified under the Companies Act, 2013
- ICAI Guidance Notes for areas without mandatory standards
Legal Reference: Section 133 of the Companies Act, 2013 empowers the MCA to prescribe accounting standards based on the recommendation of ICAI’s National Financial Reporting Authority (NFRA).
Key Accounting Standards Every CA Should Know
Here’s a curated list of important accounting standards under both AS and Ind AS regime:
| Standard | AS (Old) | Ind AS (New) | Area Covered |
|---|---|---|---|
| Revenue | AS 9 | Ind AS 115 | Revenue recognition |
| Fixed Assets | AS 10 | Ind AS 16 | Property, Plant & Equipment (PPE) |
| Leases | AS 19 | Ind AS 116 | Accounting for leases (Right of Use model) |
| Financial Instruments | No specific AS | Ind AS 109/32/107 | Recognition, measurement, disclosure |
| Employee Benefits | AS 15 | Ind AS 19 | Gratuity, pensions, etc. |
| Consolidation | AS 21/23/27 | Ind AS 110/111/28 | Subsidiaries, Joint ventures, Associates |
| Income Taxes | AS 22 | Ind AS 12 | Deferred Tax and Tax Provisioning |
| Intangible Assets | AS 26 | Ind AS 38 | Patents, trademarks, software |
| Impairment of Assets | AS 28 | Ind AS 36 | Impairment testing |
When to Use AS vs. Ind AS?
Whether a company should follow AS or Ind AS depends on its net worth and listing status, as per MCA Notification G.S.R. 111(E) dated 16.02.2015.
Ind AS Applicability (Phased Manner):
- Listed companies & those in process of listing (on any stock exchange in India or abroad) with net worth ≥ ₹250 crore
- Unlisted companies with net worth ≥ ₹250 crore
- Holding, subsidiary, joint venture, or associate of above
Others continue to follow traditional AS.
Legal References & Authority
- Companies (Accounting Standards) Rules, 2021
- Companies (Indian Accounting Standards) Rules, 2015
- ICAI Pronouncements (for interim guidance)
- NFRA notifications and audit quality reviews often flag non-compliance
📌 Recent High Court and NFRA reports underline that incorrect AS application is a frequent reason for audit qualifications and penalties under Section 143(3) of the Companies Act.
Expert View: Pro Tip for Young CAs
“Never treat accounting standards as just theoretical content. The ability to interpret AS in practical business scenarios — especially during audits and tax assessments — separates a good CA from a great one.”
— CA Nirav Shah, Audit Partner at Avenir Advisory LLP
Why CAs Must Stay Updated
- Helps avoid audit qualifications
- Ensures tax provisions (Sec 115JB, 145) align with financials
- Crucial for mergers, acquisitions, and valuation reports
- Mandatory for CARO 2020 compliance
Quick Checklist for CAs
- Follow AS/Ind AS as per client’s applicability
- Cross-reference with ICAI Guidance Notes
- Ensure disclosures in Notes to Accounts
- Review NFRA & ICAI quality review reports
- Stay updated on MCA rule amendments
FAQs on Accounting Standards
Q1. Are Accounting Standards legally binding in India?
Yes, for companies under the Companies Act. They are notified by MCA under Section 133.
Q2. What is the penalty for non-compliance?
Non-compliance may lead to audit qualifications, NFRA action, or penal consequences under the Companies Act and Income Tax Act.
Q3. Can AS be overridden by tax laws?
In some cases, yes. For example, while AS 22 allows deferred tax, its treatment under MAT (Sec 115JB) may differ.
Resources
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Summary
Important accounting standards every CA should know — simplified list with AS vs Ind AS comparison, MCA rules, expert tips, and ICAI references for audit-ready compliance.