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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Legislative Framework of Corporate Governance in India

Aarav Textiles Ltd's company secretary says that ICSI issues the accounting standards that the company must follow in preparing its financial statements. Which statement correctly reflects section 133?

The statement is incorrect. Section 133 gives the Central Government the power to prescribe accounting standards, based on recommendations of the Institute of Chartered Accountants of India. ICSI has no role, and NFRA is only consulted rather than prescribing.

  1. ACorrect, because ICSI is the body named in section 133 to recommend standards
  2. BIncorrect, because the Central Government prescribes the standards, as recommended by the Institute of Chartered Accountants of IndiaCorrect
  3. CIncorrect, because the National Financial Reporting Authority alone prescribes the standards without any Government role
  4. DCorrect, because each company's Board may choose any standard recommended by a professional institute

Explanation

Section 133 names ICAI, not ICSI, as the recommending body, and the Central Government is the prescribing authority. NFRA is consulted and its recommendations examined, but it does not prescribe the standards itself.

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