Accounting standards issued by the Union Government under the previous companies Act will continue to apply in the new legislative framework as well.
A clarification to this effect was issued by the Corporate Affairs Ministry on Saturday. This will continue till the Centre prescribes accounting standards in consultation with the proposed National Financial Reporting Authority (NFRA).
The new Act received the President’s assent on August 29, and was notified the next day. However, the 1956 legislation has yet to be repealed.
This latest clarification is significant as the Corporate Affairs Ministry had on Friday notified the implementation of 98 Sections in the new law, including the one on accounting standards (Section 133).
As per the new Companies Act 2013, the Centre will prescribe accounting standards in consultation with, and after examination of, the recommendations made by the NFRA, which has yet to be set up.
NFRA is expected to be a quasi-judicial body overseeing the overall quality of financial reporting, and will make recommendations to the Government on formulation of accounting and auditing standards.
It will also oversee the service quality of the professionals involved in compliance with the auditing and accounting standards.