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Applicability of Accounting Standards with Entity level

September 1, 2020 By Kanta sharma No comments yet

Dear Friends,

Audit is a challenging task and the Auditor needs to comply with many Accounting Standards (AS) which keep changing over a period of time and one needs to keep a track of those changing requirements. AS are applicable based on type of Organisation, Size and Financial Standings. These have been defined under three entity level. For convenience of understanding I have summarised the applicability of Accounting Standards with Entity level in the table below :

Level-1 Entities:

Non corporate entities which fall in any one of the following categories at the end of relevant accounting year are called as level-1 entities:

  1. Entities whose equity or debt securities are listed or in the process of listing with any stock exchange whether in India or abroad.
  2. Banks, financial institutions or entities carrying in insurance business
  3. All commercial, industrial and business reporting entities whose turnover is greater than 50 crores in the immediately preceding accounting period. Here other income is to be ignored in calculation of turnover.
  4. All commercial, industrial and business reporting entities whose borrowings including public deposits in excess of 10 crores at any time during the immediately preceding accounting year.
  5. Subsidiary or holding entities of any of the above.

Level-2 Entities:

Non corporate entities which are not covered in any of the above categories and fall any one of the following categories are level-2 entities.

  1. All industrial, commercial and business reporting entities whose turnover exceeds rupees 10 crores but doesn’t exceed rupees 50 crores in the immediately preceding accounting year.
  2. All commercial, industrial and business reporting entities whose borrowings including public deposits are above 1 crore but doesn’t exceed 10 crores at any time during the immediately preceding accounting year.
  3. Holding and subsidiary entities of any one of the above.

Level-3 Entities:

Non corporate entities which are not covered under level-1 and level-2 are considered as level-3 entities.

Applicability of AS:

AS NO.  Applicability  Details
AS-1 All entities   Disclosure of Accounting Policies
AS-2 All entities    Valuation of Inventory
AS-3 Level-1    Accounting Standard for Cash Flow Statement
AS-4 All entities    Contingencies and events occurring after Balance Sheet date
AS-5 All entities    Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
AS-6 All entities   Depreciation Accounting
AS-7 All entities   Construction Contract
AS-8 Not in existence    *********
AS-9 All entities    Revenue Recognition
AS-10 All entities    Property Plant & Equipment
AS-11 All entities    Effect of change in Foreign Exchange Rate
AS-12 All entities    Accounting for Govt Grants
AS-13 All entities   Accounting for Investment
AS-14 All entities   Accounting For Amalgamation
AS-15 All entities   Employee Benefit
AS-16 All entities   Accounting Standard for Borrowing Cost of Capital
AS-17 Level-1   Segment Reporting
AS-18 Level-1&2/all companies    Related Party Disclosure
AS-19 All entities   Lease Accounting
AS-20 Level-1, All companies    Earning per share
AS-21 see #   Consolidated Financial Statement
AS-22 All entities   Accounting for tax on Income
AS-23 see #    Accounting for Investments in Associates in Consolidated Financial Statements
AS-24 Level-1&2/ All companies   Discontinuing operations
AS-25 Level-1 and any entity which is required to prepare interim financial report   Interim Financial reporting
AS-26 All entities   Intangible Assets
AS-27 see #   Financial Reporting of Interest and Joint Venture
AS-28 All entities   Impairment of Assets Contents
AS-29 All entities   Contingent liability and Assets
AS-30 Level-1   Withdrawn by ICAI
AS-31 Level-1   Withdrawn by ICAI
AS-32 Level-1   Withdrawn by ICAI

#….As-21,23 & 27 are mandatory to those entities which require to prepare & present consolidated financial statements.

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