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CS Professional · Drafting, Pleadings and Appearances · Documents under Companies Act, 2013

Bharat Components Ltd wants to know who prescribes the accounting standards that its financial statements must comply with. Which statement matches Section 133?

The Central Government prescribes the accounting standards. It acts on the ICAI's recommendations, in consultation with and after examining recommendations of the NFRA. The ICAI alone, the NFRA alone, or the Registrar cannot make standards binding under Section 133.

  1. AThe Central Government prescribes them, as recommended by the ICAI, in consultation with and after examination of recommendations of the NFRACorrect
  2. BThe ICAI notifies them directly and they bind companies without any Government action
  3. CThe Registrar of Companies prescribes them after consulting the company's auditors
  4. DThe NFRA prescribes them independently, without any role for the ICAI

Explanation

Section 133 empowers the Central Government to prescribe the standards of accounting or any addendum, as recommended by the ICAI, in consultation with and after examination of the recommendations of the NFRA. The ICAI only recommends and the NFRA is consulted, so options giving final power to either are wrong.

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