The Hindu : Business : Accounting Standards to be enforced from April

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Wednesday, Feb 08, 2006

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Accounting Standards to be enforced from April

National Advisory Committee submits recommendations

NEW DELHI: The National Advisory Committee on Accounting Standards (NACAS), which advises the government in formulation of accounting standards for corporates, on Tuesday submitted its recommendations. Among other things, the committee suggested some relaxation of some standards for small and medium companies (SMCs).

NACAS, which was constituted in 2001, recommended accounting standards prescribed by the Institute of Chartered Accountants of India(ICAI), with certain changes, and the government said that it would notify them soon so that they become effective from April this year.

So far, accounting standards issued by the ICAI were mandatory only for its members who were required to comply with them while discharging their audit functions. However, through an amendment made in 1999, the Government had made them binding on all corporates till NACAS recommendations were notified. The notification by the Government of the NACAS recommendations will give statutory authority to the Accounting Standards.

"The Government will examine these recommendations for notification at the earliest,'' Company Affairs Minister P. C. Gupta told reporters here.

Penalties to be prescribed

He said even as the Government planned to make these part of the new Companies Bill, which was likely to be tabled in Parliament in the second half of the budget session, it would "take steps to make them effective from April 1 itself.''

NACAS Chairman Y H Malegam said that they had recommended relaxations for SMCs in some provisions as the cost of adherance and other procedural complexities could be a burden for them.

Mr Gupta said penalties would be imposed for failure to implement these norms. "These penalties would be provided in the new Companies Act,'' he said. The Institute of Chartered Accountants of India on Tuesday said it was in the process of preparing eight new accounting standards, including one each for insurance contracts and share-based payments like ESOPs. ICAI President T. N. Manoharan said the institute was also revising an equal number of existing standards.

PTI, UNI

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