ACCOUNTING FOR SEGMENT REPORTING ACCOUNTING STANDARDS AND CORPORATE FINANCIAL REPORTING IN INDIA

Mr. K. KARUPPUSAMY. M.Com. M.Phil., M.B.A., PGDCA., PGACCM., B.Ed.

Assistant Professor in Commerce, School of Commerce, NIFT-TEA College of Knitwear Fashion, Tirupur - 641 606. Mobile No: 9659576010,8056976008, 9751168410, 8925256299 E-mail ID: ranirose2010@gmail.com, karuppusamy@nifttea.in

Abstract This study makes a critical examination of the present accounting standard setting process and current issues and practices of corporate financial reporting (CFR) in an Indian context by referring to 95 annual reports of large sized companies. It is found that Indian accounting standards have many alternative accounting choices which make financial statements of companies less comparable. The Accounting Standard Board (ASB) has issued 12 definite accounting standards, yet none of them has been reviewed. The membership of ASB lacks proper representation particularly from the user side. The standard setting process has deficiencies in the absence of public hearing and the machinery for enforcement of accounting standards is not apparent. While a review of CFR shows a strong tendency for companies to follow strict legal requirements in the disclosure and preparation of financial statements, there is much diversity in voluntary reporting practice particularly with respect to value added accounting, reporting by segments, inflation accounting, human resource accounting, and corporate social performance reporting, and there has been a tendency towards minimum disclosure. The study suggests that, to improve standards the Institute of Chartered Accountants in India should establish a Financial Reporting Council (FRC) to oversee ASB and to prepare a conceptual framework for financial reporting purposes.