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

Which of the following best describes the role of the Institute of Chartered Accountants of India in relation to accounting standards under the Companies Act, 2013?

ICAI recommends accounting standards, and the Central Government prescribes them under Section 133 of the Companies Act, 2013, in consultation with and after examining the recommendations of the National Financial Reporting Authority. ICAI does not directly bind companies, nor approve each company's policies.

  1. AIt directly notifies standards that bind all companies without any Government involvement
  2. BStandards are prescribed by the Central Government as recommended by ICAICorrect
  3. CIt audits the accounts of every company and fixes standards case by case
  4. DIt approves each company's accounting policies before the annual general meeting

Explanation

Section 133 provides that the Central Government may prescribe standards of accounting as recommended by ICAI, after consultation with NFRA. ICAI therefore recommends, while the Government prescribes, so the notion of direct binding notification by ICAI is wrong.

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