# Central Government to Prescribe Accounting Standards — Section 133

## 1. Authority

The Central Government (CG) is empowered to prescribe Accounting Standards (AS) for companies.

## 2. Process of Prescription

CG may prescribe AS:

Recommended by ICAI, and
In consultation with and after examination of recommendation by NFRA (National Financial Reporting Authority).

## 3. Transitional Provision

Until NFRA was constituted, CG could prescribe AS:

Recommended by ICAI, and
In consultation with & after examining recommendations of the National Advisory Committee on Accounting Standards (NACAS).

⚠️ Common exam mistakes

Stating that ICAI directly prescribes AS for companies — ICAI only recommends; CG prescribes.
Forgetting the role of NFRA — its consultation/recommendation is mandatory before CG prescribes AS.
Confusing the transitional body NACAS with the current NFRA.

Bare-Act text Section 133 · Companies Act, 2013 · click to expand

Section 133 — Central Government to prescribe accounting standards: 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.

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Central Government to prescribe Accounting Standards (Section 133)

⚠️ Common exam mistakes