Globalization has called for strong organizations to cope with emerging challenges and their necessity in the home country is sine qua non as they have to face stiff competition from MNCs. The economic behemoths of developed nations are well versed with the international benchmarks and accounting standards as they have already passed the test of the international accounting standards. The subcontinent has been a prime destination for investments and one of the best marketing avenues for which there has been a concerted effort by international giants to come to the forefront and enjoy the benefits. With this background the importance of accounting standards is gaining ground and so is its convergence towards international accounting standards.

The applicability and compliance of accounting standards depend on the relevant provisions of the concerned law. It is applicable only on the class of entities, which are bound by law to implement the same. The standards apply only to material items; however, the materiality is not objectively defined. These standards are applicable only from the date they become mandatory and are never applicable with retrospective effect.

Compliance with accounting standards by enterprises is specified in the laws of the country. The multi-regulatory authorities in our country look after the administration of the accounting standards. A specific regulator calls for implementation of accounting standards by enterprises coming under its purview, as per law requirements in relevant sections. The organization chart given below explains the legal provisions or regulatory authorities those call for compliance of the accounting standards. While the Companies Act, 1956 and Income Tax Act, 1961 and other legal acts have their provisions for compliance of accounting standards, The Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), and Insurance Regulatory and Development Authority (IRDA) are statutory bodies, who call for compliance of accounting standards by enterprises coming under their domain. Statutory auditors are a set of professionals who in the process of audit of accounts of an enterprise look into the compliance or otherwise of accounting standards.

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