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

Meera Industries Ltd's board is reviewing how accounting standards are notified. Which description best matches the main (non-proviso) procedure in Section 133 for prescribing standards?

The main rule in Section 133 is that the Central Government prescribes accounting standards on the ICAI's recommendation, in consultation with and after examining the National Financial Reporting Authority's recommendations. The power sits with the Central Government, and the ICAI and NFRA play recommending and consultative roles.

  1. AThe Central Government acts on its own, without any recommendation
  2. BThe Central Government acts on the ICAI's recommendation, in consultation with and after examining the recommendations of the NFRACorrect
  3. CThe NFRA alone notifies the standards, with no role for the Central Government
  4. DThe ICAI notifies them directly after consulting the stock exchanges

Explanation

The main part of Section 133 gives the power to the Central Government, which acts on the ICAI's recommendations and in consultation with, and after examination of, the NFRA's recommendations. Option A omits the recommendation; options C and D wrongly shift the power away from the Central Government.

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