Financial Daily from THE HINDU group of publications
Thursday, Oct 03, 2002
Financial Daily from THE HINDU group of publications Thursday, Oct 03, 2002 |
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Opinion
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Accountancy Columns - Account Speak Bitter truth
THERE can be no better day for accountants to introspect on the meaning of `truth' than on Gandhiji's birthday. Encarta defines truth as correspondence to fact or reality, or something that is so clearly true that it hardly needs to be stated. Other shades of meaning are honesty, sincerity, integrity, or adherence to a standard or law. Though the output of a professional auditor — the opinion — hinges on the key phrase `true and fair', it could be anachronistic that the Companies Act does not define it in the tome. Lawmakers are known to skip known things, because they are too obvious. Thus, it is understood that financial statements are true if the books whereon they are based neither overstate nor understate, include the material items, go in tune with the GAAP, and so on. Truth had to shed its partner `correctness' to choose `fairness' when it became evident that it would be silly to sleep peacefully when accounts are only arithmetically correct. For what is `correct' need not be right. Well, these are but loose words. There is always a lot of subjectivity that can go into a word play. Also, it would be too much to expect an auditor to play a schoolboy's job of re-totalling everything, rechecking all figures and ensuring the right numbers are shown in the right places. What is needed is an assurance of overall okay, a confidence-instilling that fairness prevails. However, over the years, `fair' has taken a fair amount of beating to lose its sheen. And the big picture has become too hazy to draw comfort from. When the American CEOs and CFOs lined up to testify on the correctness of the statements they had filed with the SEC, death knell had been sounded on the gentlemanly understanding of truth being too obvious to be stated. It could, therefore, be a matter of time that Indian law too recognises the need to define truth and fairness. What is not black doesn't become white by default, just as one who is not married is not necessarily single. There are many shades of grey; and a law that relies on a sense of fairness among those governed tends to evolve spasmodically in the aftermath of betrayals, such as those witnessed recently in giga goofups that ensnared the accountants.
hindubusinessline@hotmail.com
D. Murali
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