Accounting Standard (AS) 1
Disclosure of Accounting Policies Contents
Fundamental Accounting Assumptions
Nature of Accounting Policies
Areas in Which Different Accounting Policies are Encountered
Considerations in the Selection of Accounting Policies
Disclosures of Accounting Policies
Disclosure of Accounting Policies
[This Accounting Standard includes paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the contextof the Preface to the Statements of Accounting Standards1 and the‘Applicability of Accounting Standards to Various Entities’ (See Appendix 1to this Compendium).]
1. This Standard deals with the disclosure of significant accounting policies followed in preparing and presenting financial statements.
2. The view presented in the financial statements of an enterprise of itsstate of affairs and of the profit or loss can be significantly affected by the accounting policies followed in the preparation and presentation of the financial statements. The accounting policies followed vary from enterprise to enterprise. Disclosure of significant accounting policies followed is necessary if the view presented is to be properly appreciated.
The Institute of Chartered Accountants of India has, in Standards issued by it, recommended the disclosure of certain accounting policies, e.g.,translation policies in respect of foreign currency items.
In recent years, a few enterprises in India have adopted the practice of including in their annual reports to shareholders a separate statement of accounting policies followed in preparing and presenting the financial
1 Attention is specifically drawn to paragraph 4.3 of the Preface, according to which Accounting Standards are intended to apply only to items which are material. 36 AS 1 (issued 1979)
In general, however, accounting policies are not at present regularly and fully disclosed in all financial statements. Many enterprises include in the Notes on the Accounts, descriptions of some of the significant accounting policies. But the nature and degree of disclosure vary considerably between the corporate and the non-corporate sectors and between units in the same sector.
Even among the few enterprises that presently include in their annual
reports a separate statement of accounting policies, considerable variation
exists. The statement of accounting policies forms part of accounts in some
cases while in others it is given as supplementary information.
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