The Hindu Business Line : Find your way through standards maze

AMONG some of the drabbest readings would rank accounting standards, perhaps next only to insurance policies and politicians' prepared speeches. True. You cannot make them interesting. False. Take, for instance, Dolphy D'Souza's Ready Reckoner to Indian Accounting Standards & GAAP in two parts, published by Snow white (www.swpindia.com). Packaged more like pulp fiction, the books have all the trappings of a winner — in content and presentation. Though you do not have fighting and chasing as in a thriller, you can depend on Dolphy to guide you through the maze of standards, with the help of crisp discussion followed by close-to-real-life illustrations. Thus, when "the management tells you that there is no need for them to follow accounting standards of the ICAI because those are for the auditor to follow," you would have to rebut by drawing attention to the Companies (Amendment) Act, 1999. However, at times, things can turn tricky: "A company engaged in manufacture of chemicals tells you that WIP is not valued since it is difficult to ascertain the same in view of the multiple processes involved and in any case, the value of opening and closing WIP would be more or less the same."

After that chemical exposure, let's see how an auditor would respond to a client who frets that as a result of new technology, there's an increase in idle hours so he is mixed up whether `installed capacity' can be treated as `normal capacity'. Readers would benefit from the elaborate handling of newer standards. "Substantial period has not been defined under AS-16 but has been explained in an accounting standard interpretation," Dolphy collates info, because the ICAI has been having too many second thoughts with its pronouncements that one may wonder if AS are as evolving as a baby's lisp.

One good thing about the author is that he knows his target audience, the CAs, and so does not presume knowledge when it comes to new concepts: "What is diluted EPS and what is the objective of disclosing diluted EPS?" he asks before going on to explain. Likewise: "Are mandatory accounting standards required to be complied with in the preparation of interim financial statements? Are books intangible assets? And, how is impairment measured?"

While Part I devotes pages to commentary, issues and solutions, the second part is a bunch of ext of AS, ASIs, GCs, GNs and so forth, where more than the author it is the publisher who may take the credit for sleek presentation. An index is only too necessary for a work of this nature because a burning question in your head may, for example, be on when to use full cost method rather than successful efforts method, and 1600 pages plus are a lot to get lost in.

The compact volumes show the comparison of Indian standards with their US counterparts, and factor in opinions of Expert Advisory Committee. Standards such as AS 22 have been elaborately discussed. "It may be difficult to explain the concept of virtual certainty without the use of examples," writes Dolphy.

"In the case of a pharmaceutical company, virtual certainty may be demonstrated through the successful patent of a blockbuster drug." For an oil company, discovery of oilfield would be something analogous. Diagrams help in AS 23, reminding one of holding company problems in accounting text.

For the fraction of what it could cost you for a conference, you can consider adding Dolphy's new work to your shelf.

BooksOfAccount@TheHindu.co.in

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