New Delhi, Feb. 7
COMPANIES may be required to adopt a new and revised set of accounting standards (AS) from accounting periods beginning April 1. These standards, which have been recommended by the National Advisory Committee on Accounting Standards (NACAS), would have the statutory backing of the Companies Act as soon as they are notified by the Union Government.
So far, corporates were required to adhere to the AS of the Institute of Chartered Accountants of India (ICAI) in view of the deemed statutory support given to such standards by the Companies Act, after its amendments in 1999.
The Government has now decided to accept in toto the recommendations of the NACAS, which submitted its report to the Minister for Company Affairs, Mr Prem Chand Gupta, here on Tuesday.
"We would definitely accept the recommendations. I don't see why we should not," Mr Gupta told newspersons when asked whether the Government would accept the NACAS recommendations in totality.
NACAS, which is chaired by Chartered Accountant, Mr Y.H. Malegam, was constituted to advise the Government on formulation of accounting standards to be followed by corporate entities.
The new accounting standards are not significantly different from those prescribed by ICAI, and therefore, would not have any impact on corporate financial statements, said Mr Gupta.
After reviewing all the AS issued by the ICAI till date, the NACAS has finalised and submitted its recommendations to the Government.
So far, 28 accounting standards (AS 1 to 7 and AS 9 to 29) have been recommended by NACAS. The AS-8 has been withdrawn as its contents have been subsumed in AS-26, which deals with intangible assets.
Commenting on the recommendations made by NACAS, the Chairman of the Committee, Mr Y.H. Malegam, said that the new AS recommended by the committee has also taken care of the special requirements of small and medium companies (SMCs).
As regards the definition of SMCs, Mr Malegam said that NACAS has adopted a definition that was not entirely the same as that of ICAI for small and medium enterprises.
According to Mr Malegam, any company whose turnover does not exceed Rs 50 crore and borrowings is not more than Rs 10 crore, and is not listed, falls under this category. The institute adopts a three-level system for defining enterprises.
Meanwhile, the ICAI President, Mr T.N. Manoharan, said that the institute plans eight new accounting standards during the coming month, including accounting standards on financial instruments, accounting and reporting of retirement benefit plans, investment property, agriculture, insurance contracts, and share-based payments.