The Institute of Chartered Accountants of India has specified various Accounting Standards which are required to be followed by the Members of the Institute when they carry out audit of accounts of any person.
As on date, there are 32 Accounting Standards which have been notified by the Institute in relation to the audit of accounts. However, out of the 32 Accounting Standards as above, there are some Accounting Standards which are mandatorily required to be followed only in respect of listed Companies.
The applicability of Accounting Standards in relation to HUF Assessee comes into picture only when accounts are required to be audited under any law. In case the accounts are audited, then the following Accounting standards are required to be followed mandatorily. For this purpose, the HUF assessees have to be divided into three categories: 1
- General category HUF (Also known as Level III enterprises for the purpose of Accounting Standards)
The Accounting Standards dealt with herein below are applicable to all types of HUF whose Accounts are being audited and they are :-
AS-1 Disclosure of Accounting policies
AS-2 Valuation of Inventories.
AS-4 Contingencies & events occurring after the balance sheet date
AS-5 Net profit or loss for the period, prior period items and changes in Accounting policies.
AS-6 Depreciation Accounting
AS-7 Construction contracts
AS-8 Accounting for Research and development(AS 8 is withdrawn from the date AS 26, Intangible Assets, becoming mandatory for the concerned enterprise)
AS-9 Revenue Recognition
AS-10 Accounting for fixed assets
AS-11 Effects of changes in foreign exchange rates
AS-12 Accounting for government grants
AS-13 Accounting for investments
AS-14 Accounting for amalgamations
AS-15 Employee benefits
AS-16 Borrowing costs
AS-19 Leases(there are certain exemptions regarding disclosure requirements)
AS-22 Accounting for taxes on income
AS-26 Intangible assets
AS-28 Impairment of assets
AS-29 Provisions, contingent liabilities and contingent assets (there are certain exemptions regarding disclosure requirements)
2. Special HUF (Also known as Level II enterprises for the purpose of Accounting Standards)
The Accounting standards dealt with herein below are applicable to only those HUFs whose
- turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 40 lacs but does not exceed Rs. 50 Crores. Turnover for this purpose doesn’t include other income.
- Borrowings, including public deposits are in excess of Rs. 1 crore but not in excess of Rs. 10 crores at any time during the accounting period.
1. All the accounting standards as specified above
3. Special HUF (Also known as Level I enterprises for the purpose of Accounting Standards)
Further in respect of those HUFs whose turnover for the immediately preceding accounting period on the basis of audited financial statements exceeds Rs. 50 Crores or whose borrowings including public deposits is in excess of Rs. 10 Crores at any time during the accounting period, all the Accounting Standards are applicable. However, there are certain Accounting Standards which by their very nature are applicable only in case of Listed Companies and therefore, they are not applicable to HUFs falling under Level I enterprise.