Section 133 of CA 2013 : Section 133: Central Government To Prescribe Accounting Standards

Explanation using Example

Imagine a scenario where a new accounting standard on revenue recognition is developed by the Institute of Chartered Accountants of India (ICAI). Before this standard can become mandatory for companies to follow, the Central Government needs to prescribe it officially. According to Section 133 of the Companies Act, 2013, the government will consult with the National Financial Reporting Authority (NFRA) to examine the ICAI's recommendations. Once the NFRA agrees, the government will prescribe this new standard, and all companies will then have to record their revenue according to this new regulation.

If the NFRA is not yet constituted, the government will instead consult with the National Advisory Committee on Accounting Standards as per the old Companies Act, 1956, before prescribing the new standard.