AS-1 of ICAI: Disclosure of Accounting Policies

AS-1 of ICAI: Disclosure of Accounting PoliciesThe ICAI’s Accounting Standard 1 (AS-1) addresses the mandatory disclosure of significant accounting policies that are used in the process of preparing and presenting the “true and fair” view of the financial statements. This disclosure is done in the form of a separate statement or notes that are included in the financial statements. The purpose of this disclosure is to make it easier to meaningfully compare the financial statements of various enterprises and time periods.

ICAI’s AS-1: Disclosure of Accounting Policies (as on 01/02/2022)

The state of affairs and profit or loss of any enterprise/ period can be significantly affected by following varied accounting policies and or changes therein, while preparing and presenting the financial statements and hence there is a need to follow generally accepted accounting policies and to make requisite disclosure thereof or of the changes therein, including to meet statutory compliance requirements in certain cases. It may be noted that adherence to fundamental accounting assumptions, like Going Concern, Consistency and Accrual Basis, is not required to be disclosed as part of notes on accounting policies; however any variation there from, is required to be disclosed mandatorily.

Disclosure of accounting policies means disclosure of the specific accounting principles/ methods / rules adopted or followed by an enterprise in preparation and presentation of the financial statements, as any change therein is capable of delivering different results and/ or the different state of affairs, which can substantially affect the ‘true and fair view’ due to application of different set of policies/ principals/ methods/ rules. Therefore it is necessary to clearly set out and disclose all the significant accounting polices which have been adopted/ followed, by way of notes (preferably at one place) forming part of the financial statements, for better understanding of the concerned users.

The accounting policies followed/ adopted by an enterprise are sometimes mandated/ required to be changed while preparing the financial statements. In such situations, its is required that any change in accounting policy/ policies which has a material effect on the ‘true and fair’ view should be quantified and disclosed with impact thereof on the state of affairs and/ or on the profits or losses of the current or future periods. Also, where the impact of change is not ascertainable, the fact needs be adequately disclosed.

AS-1 Related Posts:

Considerations in Selection of Accounting Policies as per AS-1

Nature & Disclosure of Accounting Policies as per AS-1

Areas where different Accounting Policies may be adopted as per AS-1

Fundamental Accounting Assumptions (Going Concern, Consistency & Accrual) as per AS-1

AS-1 of ICAI: Disclosure of Accounting Policies

List of Accounting Standards of ICAI: AS-1 to AS-32

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