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CMA Intermediate · Financial Accounting · Accounting of Limited Liability Partnership

Which statement about accounting standards for LLPs is correct under Section 34A of the LLP Act, 2008?

Under Section 34A, the Central Government, in consultation with NFRA, may prescribe accounting and auditing standards as recommended by ICAI for a class or classes of LLPs. Standards are therefore not automatically applicable to all LLPs.

  1. AThe Central Government may prescribe accounting and auditing standards, in consultation with NFRA, as recommended by ICAI, for a class or classes of LLPsCorrect
  2. BEach LLP must follow Ind AS irrespective of its size
  3. CICAI directly notifies standards binding on all LLPs without Government action
  4. DOnly auditing standards may be prescribed, not accounting standards

Explanation

Section 34A, inserted w.e.f. 1-4-2022, empowers the Central Government, in consultation with NFRA, to prescribe accounting and auditing standards as recommended by ICAI for a class or classes of LLPs. The Government prescribes them, not ICAI directly, and both kinds of standards are covered.

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