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Saturday, Mar 30, 2002

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Corporate - Accounting Standards

`Disclose EPS in line with norms'

K.R. Srivats

NEW DELHI, March 29

THE Institute of Chartered Accountants of India (ICAI) has held that every company, which is required to give information under Part IV of Schedule VI of the Companies Act, 1956, should calculate and disclose earnings per share (EPS) in accordance with the institute's Accounting Standard on Earnings Per Share (AS-20).

A senior official from ICAI said that this stipulation is applicable irrespective of whether the equity shares or potential equity shares of a company are listed on a recognised stock exchange in India or not.

``Even though AS-20 does not require an enterprise, which has neither equity shares nor potential shares which are so listed, from mandatorily calculating EPS in accordance with the standard, there were doubts as to whether such an enterprise will have to adhere to AS-20 when it discloses EPS in compliance with the requirements of any statute'', the ICAI official said.

The official pointed out that such doubts have now been clarified, with the ICAI taking a view that enterprises disclosing earnings per share for complying with the requirements of any statute or otherwise should calculate and disclose EPS in accordance with AS-20.

Part IV of the Schedule VI of the Companies Act pertains to disclosure of balance sheet abstract and company's general business profile. It requires, among other things, disclosure of earnings per share.

The AS-20 has come into effect in respect of accounting periods commencing on or after April 1, 2001. Enterprises whose equity shares or potential equity shares are listed on a recognised stock exchange in India are mandatorily required to adhere to the ICAI's accounting standard on Earnings Per Share (AS-20).

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