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

Zenith Polymers Ltd wants to adopt a new accounting standard for its financial statements. Under the Companies Act, 2013 as reproduced in the official text, who prescribes the standards of accounting, and on whose recommendation?

Under section 133, the Central Government prescribes accounting standards. It acts on ICAI's recommendations, in consultation with and after examining the recommendations made by the National Financial Reporting Authority. Companies, SEBI or ICSI do not prescribe them.

  1. AThe Central Government prescribes them, as recommended by the Institute of Chartered Accountants of India, in consultation with and after examination of the recommendations of the National Financial Reporting AuthorityCorrect
  2. BThe company's Board of Directors prescribes them on the recommendation of the Audit Committee
  3. CThe Securities and Exchange Board of India prescribes them on the recommendation of the stock exchanges
  4. DThe Institute of Company Secretaries of India prescribes them in consultation with the Registrar of Companies

Explanation

Section 133 empowers the Central Government to prescribe accounting standards as recommended by ICAI, in consultation with and after examination of recommendations of NFRA. The Board, SEBI or ICSI hold no such power under this section.

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