Accounting standards form the backbone of financial accounting, that guides and standardizes accounting principles over a regulatory framework. Accounting standards establish when and how economic events are to be recognized and measured. In a standardized economy, accounting standards are used by various external entities such as banks, investors and regulatory agencies to assess the financial status of an entity. Accounting standards relate to all aspects of an entity’s finances including assets, liabilities, revenue, expenditures and equity.
In the United States of America, Generally Accepted Accounting Principles are heavily used among public and private entities.
The rest of the world primarily uses International Reporting Financial Standards (IFRS). These standards have been established and required to be used for multinational entities, so that there is uniformity in reporting across geographies.
In India, the commonly accepted accounting standards pertaining to retirement bebefits are are “Accounting Standard 15” AS-15 (revised 2005) and Indian Accounting Standard 19 (IND AS19).
By order of the Mninistry of Corporate Affairs, the Indian Accounting Standard 19 (IND AS19) has been mandated as the standard accounting standard for all listed companies, as well as unlisted companies with net worth not less than Rs. 2.5 Billion, on and after 1st April 2017. This is to bring Indian accounting reporting standrads in line with the International Reporting Financial Standards (IFRS).