The National Advisory Committee on Accounting Standards or Nacas, favoured suspending of key rule AS-11, which required firms to mark-to-market foreign exchange assets and liabilities for two years, reported the Economic Times. Nacas is the final word on accounting policies followed by Indian Industry. The decision is a great relief to corporate India.
The Confederation of Indian Industry or CII recommended the suspension of the rule known as AS-11 as it could severely distort earnings of many companies at a time when market conditions are not normal. Indian industry will post better results if the recommendations of Nacas are accepted. Many companies would post higher profits, as 27% rupee depreciation against dollar in the past one year, would not be reflected in their results. This would lead to higher tax collections for the government.
Nacas consists of representatives from the ministry of corporate affairs, the Reserve Bank of India or RBI, Comptroller and Auditor General of India or CAG and various chambers of commerce. Nacas has recommended of suspension of AS-11 till April 2011. However, the Ministry of Corporate Affairs, which gives statutory force to Nacas' suggestions through notifications declined to comment.
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