Question

How often should a standard be updated? Please explain your answer .

Answer 1

Before answering how often standard should be updated let's first know about what basically standards are and what purpose they fulfill:

Standards are guidelines or guidances relating to treatment of various transactions in which entity enters , so standards are set to maintain uniformity in various entity accounting transaction.Another purpose for setting standard is to cope with the changing business scenario and maintain equity.If no standards were set enterprises go for some vague treatments of transactions which leads to difficulty in comparing the performance of one enterprise with that of another.

Looking at the above facts standards fulfill the purpose of comparativity of various entity financial transaction performance and provide basis to investor to judge which enterprise is suitable for investment purpose.

So ultimately to cater all these needs question arises is how often standards need to be updated -there is no absolute period which can be define to update standards ,updation of standards depends basically upon changing needs of industries.Dynamic industry where customer need changes with passage of time and according to that transaction also keep on changing needs updation of standards as per changes happening in that industry while industry who are more stable like banking where transactions of taking deposit or giving finance not going to change over period of time needs updation in standards very less