CAduniya.com : CA India Blog

Mumbai: The rickety Indian economy made many listed companies on the stock exchange to turn round their financial figures to comply with market expectations.

Among 4,867 companies listed, on the Bombay Stock Exchange and 1,288 companies listed on the National Stock Exchange, almost 1,200 companies, including 25-30 firms on the benchmark of Sensex and Nifty indices, were found to be on the guilty line

As per a study ‘Early Warning Signals of Corporate Frauds’ by the Institute of Chartered Accountants of India (ICAI), and Indiaforensic Consultancy Services, around 73 percent of those surveyed resorted to the swindle to attain analyts’ expectations while the unlisted firms opted for it to avoid taxes and attract investments from foreign firms. These unexpected findings have evoked significant reaction. Commenting on the trust involved in the figures mentioned by those listed firms, Vidya Rajarao, Executive Director of Financial Advisory Services at consultancy PricewaterhouseCoopers says, “Accounting fraud is the most egregious fraud because it goes against the basic concept of investor confidence in financial statements, if these are manipulated then there is no other information which is trustworthy.”

D. Murali

Chennai: All of a sudden, conferences and seminars on IFRS (the International Financial Reporting Standards) are the in-thing, where you can find accounting professionals busy taking notes and asking questions, so that they are ready for the 2011 deadline when India will be converging with IFRS.

But why should we be focussing on the IFRS now? When posed that query, Dr Kamal Gupta, former Technical Director of the Institute of Chartered Accountants of India (ICAI), asks in response, “Can India be isolated, if more than 100 countries already adopt IFRS, and more than 150 will adopt it by 2011?”

Even in the US, with a prime GAAP, something epoch-making has happened - subject to certain conditions, the domestic US companies will be moving towards IFRS, he adds. “If the US does it, the UK does it, Brazil, China, Russia… how can India be left.”

Most of our companies have global kind of links, be it for exports, imports, shareholding, and so on, reminds Dr Gupta during an evening interaction with Business Line recently. “Therefore, we must do our accounting in a manner that the world understands. So I think more than ever, there is a need for it. The Institute, the Government, the industry recognise it.”

While convergence is good, on a theoretical and conceptual framework, there are tremendous practical difficulties, Dr Gupta cautions. “However, we must first accept the concept, so that we can deal with the difficulties as we go along.”  more