Financial Daily from THE HINDU group of publications
Thursday, Aug 08, 2002
Financial Daily from THE HINDU group of publications Thursday, Aug 08, 2002 |
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Opinion
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Accountancy Columns - Account Speak The `re' thing D. Murali
A SECRET team is working hard to bring out the next standard for accountants and it is about `restatements'. This should come handy for companies that are impatiently waiting to jump onto the re-wagon. The new pronouncement would be on how one should remould accounts for the same period, when the demand for such an exercise is either express or implied. Since this is only the beginning, we have examples of companies that had to redo their books when the regulator ordered the same. Soon, it would be the hip thing to do, for in a world of Supermen, you would have no choice but to redress yourself, pulling the snug brief over your pants. A few ground rules have been set: That restatement should not go beyond ten years, or three successive accountants whichever is less; while restating, one should not commit the same errors that crept into the originals, though there could be newer ones; adopt the materiality test to ensure that restatement is done only of material items, and that all material items are restated; strictly follow the matching principle so that you restate assets as much as you do liabilities, and that pluses are revised as minuses and vice-versa; and that the fundamental accounting assumption of `consistency' should never be `deemed' to have been disturbed by restating. The `going concern' tenet that seems to form the bedrock of present-day accounting has been restated by the new standard as a `growing concern', and the `accrual' concept has been given the short shrift since it belongs to the first outputs only. How cruel! Prudence is for dunces, and when one says `substance over form', check whether it is some psychedelic substance. A few maxims have been laid down: `No first, no second', meaning you do not have to restate if you have not gone through the first yet. A relieving corollary, however, is `Do it right the second time', that is, you can abort the first and make a fresh second start. And `never say sorry' — for figures seldom lie, they only get laid.
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