Monday, April 7, 2008

'Delay in formulation and implementation of new rules is a disservice to investors and other stakeholders'

Derivatives: ‘ICAI should advance the implementation of AS-30’

The recent direction of the Institute of Chartered Accountants of India (ICAI), requiring companies to provide for losses arising from measurement of derivatives at market value, has left many questions unanswered. At least, that’s what experts feel. Furthermore, companies are less likely to want to adopt accounting rules that require higher disclosure, or the application of which results in presentation of lower profit or assets.
Should the ICAI have made the disclosure norm compulsory immediately, instead of adopting a ‘go-soft’ stance?
But as questions fly thick and fast, there is little by way of clarifications coming. “I am confused about one issue. Why AS-30, ‘Financial Instruments: Recognition and Measurement,’ should be made recommendatory from April 1, 2009 and mandatory from April 1, 2011? And then what does it mean to encourage companies to adopt the accounting standard earlier than the stipulated dates,” asks Mr Asish K. Bhattacharyya, Professor of Finance and Control, Indian Institute of Management - Calcutta.


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