Amended and updated notes on section 133 of Companies Act 2013. Detail discussion on provisions and rules related to Central Government to prescribe accounting standards.
Chapter IX (Sections 128–138) of the Companies Act, 2013 (CA 2013) deals with the provisions related to accounts of companies. Section 133 of CA 2013 provides for Central Government to prescribe accounting standards.
Recently, we have discussed in detail section 132 (Constitution of National Financial Reporting Authority) of CA 2013. Today, we learn the provisions of section 133 of Companies Act 2013.
Section 133 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 2754(E) issued dated 12.09.2013. This notification shall come into force from 12th September, 2013 i.e. the commencement date of section 133 is 12-09-2013.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | IX |
| Chapter Name | Accounts of Companies |
| Section No. | 133 |
| Section Name | Central Government to prescribe accounting standards |
| Monthly Updated Edition | Company Law PDF |
CG prescribes Accounting Standards
As per section 2(2) “accounting standards” means the standards of accounting or any addendum thereto for companies or class of companies referred to in section 133. Earlier the meaning of expression “accounting standards” was given under section 211(3C) of the Companies Act, 1956 but this section has been repealed by the Ministry of Corporate Affairs (MCA) vide Circular No. 16/2013 dated 18th September, 2013.
A new section 133 of the Companies Act, 2013 came into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013 which provides the provisions for Central Government to prescribe accounting standards.
In accordance with the provisions of section 133, the Central Government (CG) may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India (ICAI) in consultation with and after examination of the recommendations made by the National Financial Reporting Authority (NFRA).
The constitution of NFRA shall be done by CG by exercising the power of Section 132. However, this Section is yet to be notified for commencement. According to Rule 7(2) of the Companies (Accounts) Rules 2014, till the NFRA is constituted under section 132, the CG may prescribe the standards of accounting as recommended by CA Institute in consultation with and after examination of the recommendations made by the National Advisory Committee on Accounting Standards (NACAS) constituted under section 210A of the Companies Act, 1956.
Further, a new clause (da) has been inserted by the Companies (Accounts) Second Amendment Rules, 2015 vide G.S.R. 680 (E), issued dated 07-09-2015. According to this new clause “Indian Accounting Standards” means the Indian Accounting Standards referred to in Rule 3 and Annexure to the Companies (Indian Accounting Standards) Rules, 2015.
Accordingly, in exercise of the powers conferred by Section 133 read with section 469 of the Companies Act, 2013 and sub-section (1) of Section 210A of the Companies Act, 1956, the CG in consultation with NACAS has made the Companies (Indian Accounting Standards) Rules, 2015.
The Companies (Ind AS) Rules, 2015 has come into force on the 1st day of April, 2015. Now, clause (a) of sub-rule (1) of Rule 2 of the Companies (Ind AS) Rules, 2015 defines that the Accounting Standards means the standards of accounting, or any addendum thereto for companies or class of companies as specified in rule 3.
Therefore, you have to read the accounting standards as specified in the Annexure to the Companies (Ind AS) Rules, 2015 and the same shall be called the Indian Accounting Standards (Ind AS) applicable to classes of companies specified therein.
Section 133 of Companies Act 2013: Central Government to prescribe accounting standards
Section 133 shall come into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013.
The Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949, in consultation with and after examination of the recommendations made by the National Financial Reporting Authority.