Seen IPL accounts?

Accounting Standards mandate entities to test assets for impairment. Impairment is defined as a condition wherein the assets’ recoverable amount is less than the amount at which it is carried on the books.

For most intangible assets, an Impairment Test is to be done annually while for other assets, these tests are to be done when there are indicators of impairment. The Impairment Test is to be done at the level of the identifiable cash-generating unit. None can disagree that the Indian Premier League (IPL) is a large cash-generating unit. It has established itself as a Brand and qualifies to be recognised as an intangible asset.

IPL has always been more about glamour, entertainment and razzmatazz than cricket. However, since 2008, controversies, issues, charges have plagued it and counter-charges, betting, match fixing, spot-fixing and just about everything else. After a heady first couple of years, the brand has consistently been impaired every year.

Like most of its other affairs, the Board for Control of Cricket in India (BCCI) does not disclose all information in its financial statements- hence it is impossible to find out if the BCCI recognises the IPL as a brand and does an annual impairment test. The Annual Report published on its website runs to 118 pages but has only three pages for its financial statements!

The recent recommendation of the Lodha Panel to suspend two teams from the IPL and imposing a lifetime ban on two big names involved with the franchises has evoked ambivalent reactions. Why should two teams suffer for the wrongful deeds of two individuals is the most common one.

The decision does not take into account the emotions of the fans and their involvement with the teams is another. Can the teams be sold to honest companies is more a question raised in hope than a reaction.

Realities on the ground have already answered that question — entities with best-in-class governance practices have not gone anywhere near the IPL since they are probably aware that dealing with the BCCI is a very different ball game and is an art that not every can master.

The Lodha Panel verdict should be seen as a part of a process to bring the BCCI to a broom-clean condition — a process that will always have its share of ups and downs and regular court battles.

It will take a lot of time and anyone who plans to broom-clean the BCCI should have patience in abundance and some to spare.

Appeals are being made against the decision and an overworked Supreme Court will have to hear the same old discussed-to-death arguments again.

The million-dollar question (literally) is whether the IPL can brush off its impaired image and become an event we are all proud of?

A question that accompanies is whether incidences of betting and fixing will not recur in the future. BCCI has a couple of options before it. Taking a cue from the IPL itself, it can take a strategic time out and not have the IPL for a year or two and come back in a squeaky clean avatar. Or it could move the game to a country where punishment for breaking laws is implemented without fear or favour.

The BCCI should make up its mind in which direction it wants to go. The fact that even accounting standards permit reversal of impairment losses should assist it in choosing that direction.

The writer is a chartered accountant

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