Now, a revised guidance note on accounting of political parties

The CA Institute has proposed a revised guidance note on ‘accounting of political parties’, raising the bar on the quality of financial disclosures.

Prafulla P Chhajed, president, Institute of Chartered Accountants of India (ICAI), told BusinessLine that the CA Institute has come out with an exposure draft of the new guidance note and the revised version is more “elaborate and clear”.

He said the exposure draft incorporates the provisions of various Acts relevant to political parties and guidelines issued by the Election Commission in this regard.

Chhajed also said qualitative characteristics of the financial statements have been explained in the note.

It has also spelt out accounting treatment for electoral bonds, a new source of funding.

Also, for the first time, political parties will now be required to disclose the nature and type of services-in-kind received by them. However, they may not be required to measure the same.

Ashok Haldia, former secretary of the CA Institute, said the requirement to disclose the nature and type of services-in-kind is welcome though a reasonable estimate of the value should also be given.

Aseem Chawla, Managing Partner, ASC Legal, a law firm, said the recognition of receipt of services and other non-monetary consideration for accounting purposes is a step in the right direction. It will enhance transparency, governance and public accountability.

“What needs to be seen is adherence to such timely accounting guidance in spirit and the methodology adopted to translate the value of such services for book-keeping purposes,” Chawla said.

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