The Hindu Business Line : `Need to harmonise accounting norms'

WITH corporate finance reporting assuming an increasingly crucial role in the globalised environment, the need to harmonise accounting standards with global accounting standards was stressed by the participants of the National Conclave on Accounting Standards and CARO 2003 - Gateway for Change on Tuesday.

Speaking at the conclave, jointly organised by the FICCI and the Institute of Chartered Accountants of India (ICAI), Mr Jitesh Khosla, Joint Secretary, Ministry of Company Affairs, said that there was a pressing need for bringing higher degree of harmonisation in accounting standards in tune with the international standards of accounting.

Drawing attention to the inherent quality of such standards, he said: "An important point is that although there is legal sanctity to all these accounting standards, the ultimate test always lies in their logic and their utility."

He added that with the rise of IT and knowledge-based industries, new challenges have cropped up.

"Keeping this in mind, accounting standards need to be such that keep the new developing economy in sharper focus."

Also, because of developments taking place in WTO and with the establishment of rule-based trading systems, greater emphasis on intellectual property rights and value of assets have come to be recognised in different manner than earlier. In this backdrop, it is very important to have a standardised accounting treatment to deal with these issues, he said.

Mr Kamlesh S Vikamsey, Vice-President, ICAI, underscored the need for a single accounting standard that should be adopted uniformly. He also stressed the need for harmonisation of accounting standards.

Mr Siddharth Birla, co-Chairman, Corporate Laws and Legal Affairs Committee of FICCI, said that despite the enthusiasm in the corporate sector, Indian companies are still small compared to most overseas and even Asian counterparts and are not yet able to take advantage of their economies of scale. He urged that accounting standards should exist in a more simplified form for SMEs, especially proprietorship or partnership concerns.

On the issue of harmonising accounting policies, he said: "When we harmonise accounting policies, we need to ensure that other aspects having bearing on these policies are also in harmony with each other - otherwise the underlying objective would not be fully achieved."

Regarding CARO 2003 (Companies (Auditor's Report) Order, 2003), which superseded MAOCARO (Manufacturing and Other Companies (Auditor's Report) Order, 1988), the chartered accountants were of the opinion that a number of requirements have been added and the responsibility of auditors enhanced. They added that there was a need to debate how relevant CARO is.

Govt to notify standards by Q2

THE Government is set to notify by the end of the second quarter this year the accounting standards (AS) recommended by the National Advisory Committee on Accounting Standards (NACAS).

Mr Jitesh Khosla, Joint Secretary, Ministry of Company Affairs (MCA), stated this on the sidelines of the National Conclave on Accounting Standards and CARO 2003 - Gateway for Change.

NACAS had recommended (AS) 1 to 27, except AS 8 and a revised AS 11. While AS 8 deals with accounting for research and development, AS 11 deals with the impact of changes in foreign exchange rates.

Speaking to newspersons, Mr Khosla said that before notifying the same, the Government would definitely like to get feedback from the stakeholders.

NACAS was set up to advise the Government on the formulation and laying down of accounting policies and standards for adoption by companies or class of companies under the Companies Act, 1956.