Companies prepare financial statements (income statements, balance sheets, etc.) at the end of the fiscal year. Every company is obliged to report its business performance and financial position to the stakeholders of the company, such as shareholders and creditors.
If each company freely prepares financial statements, even if the current performance of each company can be seen, it will be difficult to compare it with the past performance and the performance of other companies. Therefore, companies must prepare financial statements according to the “Roadmap of Ind AS Implementation in India“.
Accounting is one of the most traditional activities in the corporate environment. Every company, after all, depends on an expert to organize its accounts. And for professionals in the field to act properly, it is necessary to follow specific ethical and technical guidelines.
To begin with, Ind AS Implementation in India provides greater transparency to accounting processes. In addition, they are by the standards commonly found in international standards.
It should be noted that transparent financial reporting goes beyond the application of a set of accounting standards that aim to provide consistency and comparability.
It is required to ensure that the auditors and the company’s management should perform their work and the tasks assigned to them properly and independently.
If Ind AS is for everyone, one of the most important steps that must be taken within the organization is “involvement”.
That is, there is a great responsibility on the part of the company’s management to involve all its personnel in knowing and, above all, learning about the scope of the different changes that implementation of Ind AS will bring into the company and will directly affect the company’s business and transactions.
Benefits of Financial Accounting Standards in Companies
- Avoiding Corporate Financial Fraud. One of the important things that benefit from this application is to avoid the risk of fraud in the company’s financial system.
- Documenting Company Finances Better.
- Making Financial Analysis More Effective and Efficient.
Why do Financial Accounting Standards need to be adhered to?
- For uniformity of financial statements.
- To facilitate the preparation of financial reports.
- To make it easier for auditors and readers of financial statements to understand and compare the financial statements of different entities.
Accounting standards are the set of accounting rules whose main purpose is to harmonize general accounting. Accounting standards also aim to:
- To compare different financial statements in complete transparency. To do this, they must be identical.
- To also help in a good understanding of the accounts and better control of these.
- To provide information on the general state of the company. It is an essential tool in the service of communication and information because accounting standards transmit reliable and relevant financial statements. They help in decision-making.
Ind AS only provides benefits to the different companies that implement them. For this reason, it must be a subject of knowledge for all and there must be continuous training by all the collaborators of the organization.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Posted by
Aman Aggarwal
AKGVG & Associates