The National Advisory Committee on Accounting Standards (Nacas),
which is the final word on accounting policies followed by the
Indian industry, has
favoured suspending for two years a key rule that requires firms to mark-to-market foreign exchange assets and liabilities, a decision which comes as a victory for corporate India, as it sits down to draw yearly financial results.
The demand to suspend this rule, known in accounting circles as AS-11 , was made by the Confederation of Indian Industry (CII) on grounds that it could severely distort the earnings of many companies. It was contended that this accounting standard, designed to address normal conditions, should be suspended for the time being, as the present market conditions were not normal.
India Inc may post better results if Nacas’ recommendations are accepted, as it would spare several companies from taking a hit to reflect the 27% depreciation of the rupee against the dollar in the past one year. Higher profits would mean higher tax collections for the government.
A similar debate is now raging in the US on whether the capital market regulator, Securities and Exchange Commission, should suspend mark-to-market accounting rule that has forced banks to report billions of dollars in asset writedowns . Nacas’ recommendations are usually accepted by the government. Nacas chairman YH Malegam declined to comment on whether the body, which was constituted by the ministry of corporate affairs, had asked for the suspension of AS-11 until April 2011.
The ministry of corporate affairs , which gives statutory force to Nacas’ suggestions through notifications , also declined to comment . Nacas consists of representatives from the ministry of corporate affairs, the Reserve Bank of India (RBI), Comptroller and Auditor General of India (CAG) and various chambers of commerce.
The decision to hold off implementing AS-11 , which would have forced companies to mandatorily account their foreign exchange losses, was taken at a Nacas meeting held in Mumbai on Tuesday.
which is the final word on accounting policies followed by the
Indian industry, has
favoured suspending for two years a key rule that requires firms to mark-to-market foreign exchange assets and liabilities, a decision which comes as a victory for corporate India, as it sits down to draw yearly financial results.
The demand to suspend this rule, known in accounting circles as AS-11 , was made by the Confederation of Indian Industry (CII) on grounds that it could severely distort the earnings of many companies. It was contended that this accounting standard, designed to address normal conditions, should be suspended for the time being, as the present market conditions were not normal.
India Inc may post better results if Nacas’ recommendations are accepted, as it would spare several companies from taking a hit to reflect the 27% depreciation of the rupee against the dollar in the past one year. Higher profits would mean higher tax collections for the government.
A similar debate is now raging in the US on whether the capital market regulator, Securities and Exchange Commission, should suspend mark-to-market accounting rule that has forced banks to report billions of dollars in asset writedowns . Nacas’ recommendations are usually accepted by the government. Nacas chairman YH Malegam declined to comment on whether the body, which was constituted by the ministry of corporate affairs, had asked for the suspension of AS-11 until April 2011.
The ministry of corporate affairs , which gives statutory force to Nacas’ suggestions through notifications , also declined to comment . Nacas consists of representatives from the ministry of corporate affairs, the Reserve Bank of India (RBI), Comptroller and Auditor General of India (CAG) and various chambers of commerce.
The decision to hold off implementing AS-11 , which would have forced companies to mandatorily account their foreign exchange losses, was taken at a Nacas meeting held in Mumbai on Tuesday.
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