Objectives and standard-setting procedure of
the Government Accounting Standards Advisory Board (GASAB)
Preface to Indian Government Accounting Standards (IGASs)
and Indian Government Financial Reporting Standards (IGFRSs)
This Preface sets out the objectives and standard-setting
procedure of the Government Accounting Standards Advisory Board (GASAB) and
explains the scope and authority of the Indian Government Accounting Standards
(IGASs) for cash system of accounting and Indian Government Financial Reporting
Standards (IGFRSs) for accrual system of accounting. The Exposure Drafts issued
by GASAB and the IGASs and IGFRSs formulated by GASAB and notified by the
President of India in accordance with the provisions of Constitution of India
should be read in the context of this Preface.
Introduction
Formation of GASAB
1. Article 150 of the Constitution of India stipulates that
“The accounts of the Union and of the States shall be kept in such form as the
President may, on the advice of the Comptroller and Auditor General of India,
prescribe.” Accordingly, with the support of the Government of India, the
Government Accounting Standards Advisory Board (GASAB) was constituted by the
Comptroller & Auditor General of India on August 12, 2002 for the Union and
States.
Composition of GASAB
2. The following is the composition of the GASAB:
i. Deputy Comptroller and Auditor General as Chairperson
ii.
Controller General of Accounts, Ministry of Finance, Government of India
iii.
Financial Commissioner, Railways, Ministry of Railways, Government of India
iv.
Controller General of Defense Accounts, Ministry of Defense, Government of
India
v. Secretary (Posts), Department of Posts
vi. Member (Finance),
Department of Telecommunications
vii. Additional Secretary (Budget), Ministry
of Finance, Government of India
viii. Deputy Governor, Reserve Bank of India or
his/ her nominee.
ix. Director General, National Council of Applied Economic
Research (NCAER), New Delhi
x. President, The Institute of Chartered
Accountants of India (ICAI), or his/her nominee
xi. President, The Institute of
Cost and Works Accountants of India (ICWAI)
(xii-xv) Principal Secretary
(Finance)/ Secretary (Finance) of four States by annual rotation and
(xvi) Director
General (Accounts)/ Principal Director, Office of the Comptroller and Auditor
General of India, as Member Secretary.
3. All Members, except the Deputy Governor, Reserve Bank of
India and the President, Institute of Chartered Accountants of India who could
nominate their representatives, are required to attend the meeting personally.
In case any Member is unable to attend the meeting, the Chairperson could be
informed in advance and the absentee Member could send the views in advance of
the scheduled Board meeting.
4. The GASAB Secretariat is located in the Office of the
Comptroller & Auditor General of India. The Secretariat normally consists
of officers from the Indian Audit & Accounts Service, Indian Civil Accounts
Service, Indian Defence Accounts Service, Indian Railway Accounts Service,
Indian Posts & Telecommunications Accounts and Finance Service.
Scope, Objectives and Responsibilities of GASAB
5. The objective of the GASAB is to formulate Standards
relating to accounting and financial reporting by the Union, the States and
Union Territories with Legislature. The Standards so formulated by GASAB are
recommended to the Government of India for notification in accordance with the
provisions of the Constitution.
6. The GASAB shall have, inter alia, the
following responsibilities:
6.1 To establish and improve Standards of Government
accounting and financial reporting in order to enhance accountability
mechanisms;
6.2 To formulate and propose Standards that improves the usefulness
of financial reports based on the needs of the users;
6.3 To keep the Standards
current and reflect change in the Governmental environment;
6.4 To provide
guidance on implementation of Standards;
6.5 To consider significant areas of
accounting and financial reporting that can be improved through the standard
setting process; and
6.6 To improve the common understanding of the nature and
purpose of information contained in the financial reports.
7. While formulating Standards, the GASAB considers the
well-established system of Government accounts in India with underlying
accounting concepts and principles. The GASAB also examines relevance of
international best practices and gives due consideration while formulating
Standards to inclusion of encouraged disclosures or additional information.
8. Consequent upon the recommendation of the Twelfth Finance
Commission for introduction of accrual basis of accounting in Government and
acceptance by Government of India in principle, GASAB suggested an operational
framework and roadmap for transition to accrual basis of accounting in
Governments. Subsequently, following the mandate given by the Government to the
C&AG to steer implementation of accrual accounting in consultation with
different stakeholders and accounting organizations, GASAB is entrusted with
the responsibility of formulating accrual based Standards.
9. The Standards
formulated on cash basis of accounting are termed as Indian Government
Accounting Standards (IGASs) and the Standards formulated on accrual basis of
accounting are termed as Indian Government Financial Reporting Standards
(IGFRSs)
Financial Statements of the Government
10. Financial Statements of the Government relate to the
Annual Finance Accounts and Annual Appropriation Accounts of the Union
Government, State Governments and Union Territories with Legislature. It would
also include appropriate statements, schedules and notes to the above
Statements. Detailed statements/schedules support the main statements/schedules
while additional disclosures are meant to augment the financial statements and
are included in the form of notes.
Authority, Scope and Applicability of IGASs and IGFRSs
11. The Standards are notified by the Government as per the
powers vested under Article 150 of the Constitution. The IGASs and IGFRSs, as
notified by the Government, are applicable to the Union and the States.
12. The provisions of the Standards do not override the
provisions of any existing or future Acts or Rules made there under by the
Union or State Governments.
13. The Standards would be prospective in their application.
The Standards are not applicable retrospectively and the Governments are not
required to reframe their Financial Statements of previous periods to comply
with the Standards.
14. Standards by their very nature are meant to apply to
material items. Any other limitation on their applicability or otherwise is
made clear by GASAB in the respective Standards.
15. The Standards have standard portions set in bold italic
type which should be read in the context of explanatory paragraphs in the
respective Standards set in plain type. Both have equal authority; portion in
bold, italic type indicating main principles whereas those in plain type
explain those principles.
Standard-setting Procedure for Accounting Standards
16. The following procedures are adopted by the GASAB for
formulating Standards:
16.1 The GASAB Secretariat identifies areas for Standard
formulation and places them before the GASAB for selection and approval. While
doing so, the Secretariat places before the GASAB all important suggestions,
references, proposals received from various sections of the Union and State
Governments, members of GASAB, members of Civil Society, Professional Bodies
and other stakeholders. The priorities, as approved by the GASAB, guide further
functioning of the GASAB Secretariat.
16.2 The GASAB Secretariat thereafter prepares the
discussion paper on the selected issues for consideration of the GASAB.
16.3 While doing so, the Secretariat studies the existing
rules, codes and principles as internal sources, and
documents/pronouncements/Standards issued by other national and international
Standard setting and regulatory bodies. The Secretariat may also hold
consultation with such other persons as are considered necessary for this
purpose.
16.4 On consideration of the Discussion paper and the
comments received thereon, the GASAB finalizes the Exposure Draft.
16.5 The GASAB may constitute Standing Committee and/or Task
based Groups from amongst the Members or their representatives to consider
specific areas before finalization.
16.6 The Exposure Draft, as approved for issue by the GASAB,
are widely circulated in the public domain and forwarded to all stakeholders.
The Exposure Draft is required to be hosted at the website of GASAB.
16.7 Based on the comments received on the Exposure Draft,
the Standards are finalized by the GASAB. The Standards, as finalized, are
forwarded to the Government for notification in accordance with the provisions
of the Constitution of India.
17. The meetings are normally chaired by the Chairperson. In
unforeseen circumstances when Chairperson is unable to attend, the senior-most
member from the Central Government will chair the meeting. The Comptroller
& Auditor General of India will be kept informed of the important
developments in the meetings of GASAB.
18. The GASAB may meet as often as is deemed necessary but
generally not less than four times in a financial year. The decisions of the
GASAB may preferably be by general consensus. In case differences persist, the
decision shall be on the basis of voting favoring the recommendation. The
dissenting views should also be forwarded to the Government along with the
recommendations.
19. GASAB allows an exposure period of 90 days for inviting
comments on Exposure Draft.
20. The format of the IGASs and IGFRSs ordinarily includes
the following:
(i) Introduction
(ii) Objective
(iii)Scope
(iv)Definition of the
terms used in the Standard
(v) Accounting and Presentation requirements
(vi)Disclosure requirements for complying with the Standard, including format
of disclosure, etc., if necessary
(vii) Explanatory paragraphs
(viii)
Transitional Provisions, if any
(ix)Effective Date.
Compliance with IGASs and IGFRSs
21. All the Standards are mandatory from the effective
date(s) mentioned therein after notification of the Standards by Government.
Financial Statements cannot be described as complying with IGASs and IGFRSs
unless they comply with all the requirements of each applicable IGAS and IGFRS.
22. Where the accounting authorities of the Union and State
Governments have deviated from the applicable notified Standards, a disclosure
shall be made with reasons for such deviations as well as the effect of the
deviations on the Financial Statements.
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