Business Daily from THE HINDU group of publications
Tuesday, Mar 10, 2009
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Business Daily from THE HINDU group of publications Tuesday, Mar 10, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Accounting Standards Industry & Economy - Regulatory Bodies & Rulings India Inc for easing accounting norms on exchange differences
The AS-11 requires entities to recognise exchange differences on all liabilities or borrowings taken to acquire fixed assets as income or expense in the period in which they arise. K.R. Srivats New Delhi, March 9 Pressure is mounting on the accountancy regulator, the Institute of Chartered Accountants of India (ICAI), to provide relief to Indian corporates that are faced with foreign exchange related losses, especially after the recent weakening of rupee against the greenback. The local currency recently hit a record low to the dollar (Rs 52 to a US dollar). India Inc wants the implementation of Accounting Standard (AS-11) to be kept in abeyance by the ICAI or instead allow them to amortise the losses that arise due to the exchange differences, sources familiar with the request said. The AS-11 requires entities to recognise exchange differences on all liabilities or borrowings taken to acquire fixed assets as income or expense in the period in which they arise. Many companies, based on legal advice, prefer to prepare the financial statements according to schedule VI of the Companies Act that allows them to capitalise the exchange differences on borrowings and, hence, the losses if any are taken to the balance sheet. The issue of deferment of AS-11 or providing relief to the industry in these tough economic environment was discussed at the two-day ICAI council meeting that ended on Sunday. “The matter is under consideration of the institute,” a senior ICAI official said, declining to elaborate on the matter. Sources said that the thinking within the ICAIis that there should be no relaxation on the application of the accounting standard AS-11. “When the foreign currency movement went in their favour and the rupee appreciated to Rs 37 or Rs 39 levels, they happily took the gains to profit and loss account. “Now, when the situation has changed and they see losses, they do not want to recognise them in profit and loss account,” they added. Accounting norms can do the trick for corporate profitability Uniform accounting norms needed ICAI plans to tighten rules on auditors’ tenure More Stories on : Accounting Standards | Regulatory Bodies & Rulings | Accountancy
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