The Hindu Business Line : Accounting standards on disclosure of financial instruments receive nod

New Delhi, May 17 Companies and commercial banks would have to in the coming years gear up for greater transparency in the disclosure of exposures to the risks involved in financial instruments such as derivatives.

A new accounting standard –Financial Instruments: Disclosures (AS-32) has received the nod of the Central Council of the Institute of Chartered Accountants of India (ICAI).

Briefing newspersons on the decision taken at the latest meeting of the Central Council, Mr Ved Jain, ICAI President, said that the Council proposes to make AS-32 recommendatory from April 1, 2009, and mandatory from April 1, 2011.

The objective of this accounting standard is to require entities to provide disclosures in their financial statements to enable users to evaluate the significance of financial instruments for the entity’s financial position and performance.

He said that the users would also be able to evaluate the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the end of the reporting period and how the entity manages those risks.

Mr Jain added that the Council has approved in principle to issue Corporate Affairs standards. These standards would be in areas such as business valuation, investor protection, corporate restructuring etc to guide the members and stakeholders to ensure a corporate regime benchmarked with best global practices.

The ICAI Central Council also gave its approval for setting up of a Chapter of the institute in New York. This will be the 20th Chapter of the institute outside India. The first chapter was set up in Namibia.

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