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CS Executive · Corporate Accounting and Financial Management · Introduction to Corporate Accounting

Under the Companies Act, 2013, which authority prescribes the standards of accounting that companies must follow, acting on the recommendation of the Institute of Chartered Accountants of India?

The Central Government prescribes accounting standards under Section 133 of the Companies Act, 2013. It acts on ICAI's recommendation, in consultation with and after examining the recommendations of the National Financial Reporting Authority. Registrars, SEBI or company boards do not prescribe these standards.

  1. AThe Central Government, in consultation with and after examination of the recommendations of the National Financial Reporting AuthorityCorrect
  2. BThe Registrar of Companies, after consulting the stock exchanges
  3. CThe Securities and Exchange Board of India, acting on its own
  4. DThe Board of Directors of each company, subject to shareholder approval

Explanation

Section 133 empowers the Central Government to prescribe accounting standards as recommended by ICAI, in consultation with and after examination of the recommendations of the National Financial Reporting Authority. The Registrar, SEBI and company boards have no such power under this section, so the other options are wrong.

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