Application of Indian AS 1, AS 2, AS 3 at Rittal India Pvt. Ltd., an Galore

Accounting is an important tool in the hands of management. It helps the management of an organization to have control over its performance. The success of a business entity depends on the combined effects of four factors – land, labour, capital and management. The contribution of each factor has to be properly measured and then only the resultant performance of the entity can be properly evaluated. Accounting in a broad sense, is a tool adopted to measure the transaction, transformation, events, etc., usually involving money as a medium of exchange. At the end of accounting period financial statements are prepared. This study covers the Accounting Standard 1, 2, 3 practices and applicability in the Rittal India Pvt. Ltd is measured and concluded that the company reporting practices are highly transparent and practicing as per the ICAI guidelines.

The rules provided that Accounting Standards 1 to 5 & 7 and 9 to 29 recommended by the Institute of Charted Accountants of India shall be the "Accounting Standards" (referred to as the "Notified Accounting Standards") for the purpose of section 129 (1)  Hossain and Ujjal (2016): "effects of Adopting International Accounting Standards on Financial Statements". In this study the researcher clear that there are various impacts of adopting IAS on firm but the most important factor is that IAS has a great impact on Financial Statement of the firm. Researcher also found that adopting IAS has not only direct impact but also indirect impact on firms. IAS affects management decision making process, cost of capital, the availability of relevant and crucial information accountability of management, operating environment of the firms. In conclusion, it can be easily said that every process there have the combination of good effect and bad effect but in adopting IAS there are too many positive effect on firms to describe.

Kenneth Enoch Okpala (2012): "Adoption of IFRS and Financial Statements effects: The perceived implications on FDI and Nigeria Economy".
In his study he focus on the implication of IFRS on the economy is the fact that financial reporting among the countries that have adopted standards is uniformity and comparability as well as the ease on interpretation of financial statements. The researcher analyzed that to prepare and audit financial statements, some accounting convention and principles known as standards have been put in place by appropriate bodies set up for the purpose to encourage uniformity and reliability.
Clare Wang (2011): "Accounting Standards Harmonization and Financial Statement Comparability: Evidence from Transnational Information Transfer". The researcher investigates whether harmonization of accounting standards enhances financial statement comparability, defined as an increase in the correlation between measurement errors across two firm's information signals. Researcher empirically test the prediction that a firm yet to announce earnings react more strongly to the earnings announcement of a foreign firm when both report under the same rather than different accounting standards.

European Central Bank (2006): "Assessment of Accounting Standards from a Financial Stability perspective".
This study is analyzed that the accounting standards can have a significant impact on the financial system, in particular via their potential influence on the behavior of economic agents. This study is mainly focuses on the recent introduction of the new accounting framework -based on the IFRSs in Europe and analyses the possible consequences thereof for, in essence, the banking sector and other financial firms from the perspective of system -wide financial stability.

STATEMENT OF THE PROBLEM
Accounting Standards and its implications on Financial Statements. It was a common practice of many organizations fudge the figure of various transactions in the books of accounts. Before the introduction of the Indian Accounting Standards issued by the ICAI, there is room for hedge of the deals, which resulted in partial disclosure of the financial performance of the organization. Most organization in India transparency, consistency and uniformity in giving accounting treatments to the various assets and liabilities. Realizing the lacunas of the accounting policies and the treatments and with the introduction of the International Accounting Standards for Indian companies. There is no other option, except adhering to the mandatory accounting standards to be implemented in preparing the annual reports of the company.

OBJECTIVES OF THE STUDY
To analyze the implications of Accounting Standard 2 Valuation of Inventory and Accounting Standard 3 Cash flow statement adoption in the RITTAL INDIA Pvt Ltd.
To understand the accounting policies followed at RITTAL INDIA Pvt Ltd.  Accounting policies and notes on balance sheet and P & L account has now become mandatory to annex notes to the financial statement disclosing the accounting policies and also explaining the treatment of certain items that appear in the P & L account and balance sheet. This helps understanding and interpreting of accounting numbers.

AS 2-VALUATION OF INVENTORIES
This AS 2 valuation of Inventories is applicable to Rittal India Pvt Ltd. The inventories as such raw materials, work-inprogress, finished goods are valued at cost or net realizable value whichever is lower (WEL) and the formula for valuation of all these inventories is FIFO (First-In-First-Out).

ANALYSIS:
The above table is clearly showing that the value of different inventories at the end of the year 2017 and 2016. These inventories are valued at the cost or Net realizable value WEL other than work in progress. Work in progress is valued at cost of conversion. The company is maintaining the method for inventory valuation as per AS-3 issued by ICAI.

INTERPRETATION:
The above graphical presentation indicates that all the inventories are increased in 2017 i.e., Raw materials, Work in progress, Finished goods and Stores & Spare parts compared to 2016.Hence we can conclude that the valuation of inventories are much important for preparing the financial statements. It is mainly effect on the gross profit or loss of the company.

AS 3-CASH FLOW STATEMENT
This accounting standard is applicable to Rittal India Pvt Ltd., Cash and cash equivalents included in the cash flow statement, comprises the cash in hand and balance with scheduled banks in current accounts. The company has prepared the Cash flow statement under the "Indirect Method" as set out in Accounting Standard 3 issued by Companies (Accounting Standards) Rules, 2006.  Page: 287

ANALYSIS :
The above table states that cash flow statement of the comapny at different activities in the year 2017 and 2016. Cash flow from operating activities are more than other two activities in both the year. but when compare to 2016, which may slighter increase in 2017. Cash flow from investing as well as financing are also increases in the year 2017 comapre to 2016.

INTERPRETATION:
The above graph shows that the cash inflow from operating, investing and financing activities in the year 2017 and 2016.
There is a decrease in investing and financing activities and it is good sign for the company. While maintaining this AS -3 as cash flow statement may helps to the company for decision making in different department in and out of the company.

DISCLOSURE:
The Rittal India Pvt Ltd discloses the components of cash and cash equivalents and presents a reconciliation of the amount in the cash flow statement with the equivalent items reported in the balance sheet. The Rittal India Pvt Ltd discloses the amount of significant cash and cash equivalent balance held by the co., that are not available for use by it with explanation of management.

FINDINGS
The study is about implication of accounting standards at Rittal India Pvt Ltd. The data is mainly gathered from the secondary data as annual reports of the company were relied upon. And after in depth study an Accounting Standards implication level in the company. The researcher came out with the following findings.

AS -1 : The disclosure of Accounting Policies
The disclosure of Accounting Policies which is AS -1 in the form of mandatory in nature deals with the treatment mentioned out to different assets and liabilities of the company. The Researcher found that the bases of preparing financial statement in the company are Indian GAAP and Accounting Standards of ICAI.

AS -2 : The Valuation of Inventories
The valuation of inventories in the company is on the basis of AS -2 which were mandatory from 1-4-1999. Some of the inventories are valued on the cost or net realizable value whichever is lower, while the others are valued on the basis of weighted average cost (cost).

AS -3 : Cash Flow Statement
AS -3 deals with preparation of Cash Flow Statement. This standard became mandatory from 1-4-2001. The company prepares its cash flow statement based on cash inflows and cash out flows. The company follows indirect method of cash flow statements.

Conclusion
The objective of this study is to find out the various Indian Accounting Standards that are applicable to Rittal India Pvt Ltd. To find the extent to which the requirements of the applicable standards are adhered to and ascertain the implications of non-adherence of any accounting standards and finally to find out the extent to which the financial statements of Rittal India Pvt Ltd are meeting the requirements and expectations of the users of the financial statements.
It is observed in the organization, the adoption of majority of applicable Accounting Standards has brought in transparency and fair disclosures of financial and other performance at the company. Slowly the stakeholders are gaining faith in the information disclosed by the company in tune with the accounting standards.