Market dynamics and government policies play a vital role in enforcing governance. A recent Deloitte survey of 300 Indian chief financial officers of listed and unlisted companies reveals that though almost half of them were optimistic about their respective industry's and company's performance in the coming year, the current global crisis, domestic slowdown, widening fiscal deficit, high interest rate and depreciating rupee have made them risk-averse.

According to the CFOs, sustaining consumer demand, managing input prices and an uncertain political environment are key economic challenges for their organisations. Amidst high interest rates, 53 per cent of those surveyed consider alternative sources of debt a better option than bank borrowing. They feel revenue growth and cost reduction could drive the agenda for the next 12 months.

“Procrastination in the name of reducing risk actually increases risk” – Colin Powell.

CSR, yes; but what about GSR?

The Companies Bill 2011 makes disclosure of CSR spend mandatory for companies, asking them to earmark 2 per cent of their average profit for CSR activities. While this stipulation could enhance the CSR spending, the real issue is whether it can address the basic challenges before us:

Water : The world over, each day 200 million work-hours are used up by women collecting water for their families. This is equivalent to building 28 Empire State buildings each day.

Sanitation : Only 27 per cent of India's waste-water is being treated. Of the 2.5 billion people in the world that defecate openly, 25 per cent live in India. There are more than 0.1 million deaths per year from diarrhoea.

Nutrition and food wastage : 46 per cent of children under the age of three suffer from malnutrition. Against this, $12.2 billion worth of agricultural produce is allowed to rot annually in the absence of post-harvest infrastructure.

Accidents : Everyday, 360 persons are killed in road accidents in India — the equivalent of a Jumbo crash per day.

What about the Government's Social Responsibility (GSR)?

Going back in time and audit impact

Budget 2012 has proposed 28 amendments to the Income-Tax Act, 1961 which are retrospective in nature. Four of these are effective from the inception of the Income-Tax Act. It is noteworthy to give a thought to the accounting and auditing issues that will arise due to these amendments.

As an example, if senior management receives performance bonus/commission, how will this be dealt with?

Or if the bank has stipulated certain interest coverage ratios, what happens to the loan covenants and credit ratings?

The retrospective amendments will impact earlier period financial statements.

While USGAAP/IFRS require re-statement of prior-period financials for any material adjustments affecting the prior period, under Indian GAAP would these be treated and disclosed as prior-period items or as extraordinary items/exceptional items/items in the normal course of business?

If considered as prior-period items, would the entities be required to and/or allowed to revise their tax returns for such previous years even after the stipulated time limits?

Clearly, the implications are beyond tax…

Give telecom infrastructure status

Mobile has brought a paradigm shift in the socio-economic development of the common man in the last 10 years. Telecom has moved from luxury to a necessity.

Also, according to recent Government Census, telecom penetration has outgrown basic drinking and sanitation facilities reach.

Mobile telecom subscribers in India are 903 million and 6 billion globally, which translate to teledensity of above 75 per cent.

Telecom currently contributes about 3 per cent to the Indian GDP and is expected to grow substantially in the future.

Considering it is virtually impossible to build brick and mortar banks, hospitals and quality education facilities due to vast geography and viability, telecom could play a role of a catalyst in creating bigger opportunities by expanding the reach of basic necessities of life such as healthcare, education, banking, and so on.

Also, according to GSMA, a 10 per cent increase in mobile penetration boosts GDP by 1.2 per cent in developing countries.

As increasing number of devices get connected to the Internet in the coming years, it is imperative to build a robust and advanced telecom infrastructure especially optic fibre backbone across the country.

Hence the Government needs to take a far sighted decision on an urgent basis by understanding the importance of telecom on the economy in the years to come and grant it a status of infrastructure sector.

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