The Hindu Business Line : ICAI approves disclosure norm for derivatives

NEW DELHI: The Institute of Chartered Accountants of India (ICAI) on Friday approved the accounting standard for disclosure of losses and gains from investment in various market-linked instruments such as derivatives, mutual funds, Government securities etc.

Under the new accounting standard (AS32), the companies would be required to disclose financial instruments such as derivatives, futures and options and MFs and loans among others in their financial statements, said Mr Ved Jain, President, ICAI today.

The new accounting standard (AS) would become mandatory from April 1, 2011. The companies, however, can adopt it from April 1, 2009, he said.

The draft disclosure norms evoked sharp criticism from the industry chambers, which argued that mark-to-market losses are notional and it would be difficult for companies to account for them.

The AS is expected to bring in more transparency in the ways the derivatives etc are shown in the financial statements. Also, it would expose the risk related to such instruments and how are they managed by the corporates.

The ICAI has earlier approved accounting standards AS 30 and 31, which dealt with recognising, measuring and presenting the accounts relating to financial instruments.

The new accounting standards, Mr Jain said, are in conformity with the International Financial Reporting Standard (IFRS), while the institute is working on converging other accounting standards with IFRS by 2011. - PTI

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