The British influence reaches
accounting: Financial reporting is actually aimed at fair presentation, and there's an independent
accounting profession which sets accounting and auditing requirements. The two major
sources of monetary accounting standards in Indian are companies law and also the accounting
profession. The first companies act was legislated in 1857, and the first law relating to the
maintenance and audit of accounting records was enacted in 1866, along with the first
formal qualifications of auditors. Both were based on British law.
The current Companies Act 1956 is administered and updated with a government
agency, the Ministry of Company Affairs. The act provides a broad framework to keep
so-called books of account and also the requirements for an audit. Based on the act,
books of accounts
- must give a true as well as fair view of the state of matters of the company
- must be continued an accrual basis based on the double-entry system of accounting.
The actual act requires an audited stability sheet and profit as well as loss account, approved by the
panel of directors. An associated directors’ report must address your affairs
of the company, it's material commitments, recommended returns, and other information
necessary for comprehending the nature of the company’s business as well as subsidiaries.The Institute of Chartered Accountants of India (ICAI), established in 1949, regulates
the profession of chartered accountancy and is responsible for developing both
accounting and auditing standards. Chartered accountants were previously known as
registered accountants and the institute was preceded by other organizations of professional
accountants, such as the Society of Auditors, founded in Madras in 1927. The
institute prescribes the actual qualifications for becoming a chartered accountant, holds
examinations and instruction programs for candidates, problems certificates to practice, and
professions members for professional wrong doings and breaches of ethical conduct.Its Accounting Standards Board issues Indian Accounting Standards (AS), and its
Auditing and Assurance Standards Board issues Auditing and Assurance Standards
(AAS). AS have statutory expert, and AAS are mandatory for that practice of auditing.The institute is supervised by the Ministry of Company Affairs.
In 2007, the ICAI
announced that it will adopt IFRS in 2011.
There are 22 stock exchanges in India, the oldest of which is the Mumbai
(Bombay) Stock Exchange, established in 1875 and now listing more than 6,000 stocks.61
The regulatory agency which oversees the functioning associated with stock markets is the Securities
and Exchange Board associated with India (SEBI), an agency of the Ministry of Finance established in
1988 as well as given statutory authority within 1992. In general, the accounting and disclosure
requirements for outlined companies are similar to those in the actual AS.
