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CMA Foundation · Fundamentals of Financial and Cost Accounting · Four Frameworks of Accounting and Forms of Organization

In India, the Accounting Standards that companies follow under the Companies Act, 2013 are notified by which authority?

The Central Government notifies the Accounting Standards for companies, acting on the recommendation of the National Financial Reporting Authority. Professional bodies such as ICAI may draft standards, but the legal notification under the Companies Act, 2013 comes from the Central Government.

  1. ACentral Government, on the recommendation of the National Financial Reporting AuthorityCorrect
  2. BReserve Bank of India, on the recommendation of SEBI
  3. CInstitute of Cost Accountants of India, through its Council
  4. DSecurities and Exchange Board of India, through listing regulations only

Explanation

Under the Companies Act, 2013, the Central Government prescribes Accounting Standards after consulting and examining the recommendations of the NFRA. ICAI and ICMAI issue or recommend standards, but they do not notify them for companies. The RBI and SEBI have no such notifying power for companies generally, which is why the other options are wrong.

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