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February 2010

Accounting norms (AS-11) under Bombay HC scanner

By Raman Jokhakar
Tarunkumar G. Singhal
Chartered Accountants
Reading Time 1 mins
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Accounting norms (AS-11) under Bombay HC scanner


The union government’s move to suspend Accounting Standards
11, allowing companies to show foreign currency liabilities as assets, has come
under the Bombay High Court’s scanner. The petition, filed by an organisation of
city-based legal experts, “Just Society”, has claimed that this permits firms
that might otherwise be sick to “paint a rosy picture”.

The government had introduced AS 11 in 2006, which required
companies to record foreign currency monetary assets and liabilities at the
exchange rate on the balance sheet date. Last year, in the midst of the global
recession and swings in the exchange rate, the Confederation of Indian Industry
and the Associated Chambers of Commerce and Industry of India made
representations to the government, according to the petitioner.

Subsequently, the National Advisory Committee on Accounting
Standards (NACAS), a government-appointed body, suspended the implementation of
AS 11.

(Source: The Times of India, dated 13.01.2010)

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