Education

New reporting standards postponed

Updated on: May 06, 2012
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In 2010, the Institute of Chartered Accountants of India had issued three Standards on Auditing which dealt with reporting (SA 700, SA 705 and SA 706), with forming an opinion on the financial statements, with modifications to the opinion, etc. These standards are in line with their international counterparts and were issued as a part of the convergence project that the Institute had taken with respect to standards on auditing.

These standards were to be applicable for audits of financial statements beginning April 1 last year (in most cases, this would have been applicable for the first time for companies having March 31 as their year-end). Now on April 17, the Institute announced that the applicability of these standards will be postponed for another year. This change has apparently been made to ensure that all chartered accountants are able to adequately familiarise themselves with the requirements of the new standards.

Quarterly results — many formats

The cascading impact of changing the format of the financial statements under the Companies Act, 1956, is that the Securities and Exchange Board of India has now made amendments to Clause 41 of the Equity Listing Agreement for the disclosure of financial results and the statement of assets and liabilities to be submitted by listed entities to the stock exchanges. The substituted formats are applicable for all filings made after the date of the Circular, that is, April 16, which means all listed companies filing their financial results and statement of assets and liabilities, as applicable, after that date will have to use these new formats. Also, the Board had earlier made amendments requiring last quarter results to be balancing figures between audited figures in respect of the full financial year and the published year to date figures up to the third quarter of the current financial year. The Board has now rolled back this requirement and restored the earlier requirement of either getting the last quarter results reviewed by the auditor or submitting the annual audited results within 60 days from the end of the fourth quarter.

Interim alternatives to IFRS

The International Financial Reporting Standards (IFRS) are currently required or permitted in over 100 countries. A lot of time and effort has been spent over the past two to three years by regulators in coming up with a revised set of standards and by companies in preparing for the adoption. However, India has missed its date with the Standards.

There are arguments for and against moving ahead with the Standards. The primary ones in favour include the need for a set of comprehensive accounting standards, and a lot of time and effort having been invested in developing Ind-AS. On the flip side, the Standards are a moving target, and the US and Japan are yet to move towards them.

Some proposed interim alternatives could be to change Indian Generally Accepted Accounting Principles to make them more comparable to the Standards; to make the Standards or Ind-AS mandatory for preparation of consolidated financial statements for public interest entities; and a clear message from the regulators.

Environment laws apply to one and all

Contrary to the layman perception, environment laws do not apply only to manufacturing and hazardous industries. Even IT/ITeS companies, services sector, offices and establishments are included. A structured framework coupled with training and awareness sessions is imperative to avoid unpleasant surprises and to be on the right side of law. At times, it is lack of awareness at the operation level which leads to avoidable aberrations. Let us have a look at some common examples.

DG sets generate waste oil which has to be disposed of in compliance with hazardous wastes management rules. The requirement to obtain consent is specific to state pollution control authorities. While certain states give a no-objection certificate; others give an authorisation.

Environmental regulations stipulate that UPS batteries have to be disposed of to registered agencies in a prescribed manner. According to the E-waste (Management and Handling) Rules which have recently become operational, consumers of electrical and electronic equipment should deposit e-waste with authorised collection centres. In case of a bulk consumer, there is a periodic reporting obligation as well.

Published on November 15, 2017

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