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Maocaro is a special order issued by the CLB, requiring the auditor's report in certain classes of companies to include a statement on matters pertaining to the functioning of the company.

NEW DELHI, Aug. 29

THE Department of Company Affairs (DCA) has constituted an expert group to review the Manufacturing and Other Companies (Auditor's Report) Order, 1988 (Maocaro) issued by the Company Law Board (CLB).

This was stated by Mr Vinod Dhall, Secretary, DCA, at a national workshop on accounting standards, organised by the Confederation of Indian Industry (CII), here on Thursday.

Maocaro is a special order issued by the CLB in terms of Section 227 (4A) of the Companies Act, 1956, requiring the auditor's report in certain class of companies to include a statement on matters pertaining to the functioning of the company (for e.g. the auditors have to certify whether a manufacturing company is sick or not at the time of signing of balance sheet).

Mr Dhall said that the DCA group would also look into the disclosure requirements under Schedule VI of the Companies Act and see how the recent disclosure requirements of the new accounting standards of the Institute of Chartered Accountants of India (ICAI) can be harmonised with Schedule VI.

Schedule VI prescribes the format of balance sheet and profit and loss accounts that managements of companies need to prepare under the Act.

The DCA Secretary also asked ICAI to present a note to the department on a framework that would to the extent possible sort out the differing and contradicting accounting requirements of different authorities of the Government.

" ICAI can prepare a note to see how far harmonisation of various accounting requirements under different legislation can be achieved so that the transaction cost and compliance cost of companies are minimised," Mr Dhall said.

This observation of the Secretary came in response to the suggestion made by Mr Kamlesh S. Vikamsey, Chairman of the Auditing and Assurance Standards Board, ICAI, that there should be only one set of accounting standards for the country.

Mr Vikamsey pointed out that various wings of the Government were issuing directions for issuance of accounting standards that are sometimes conflicting in nature.

A case in point is the Income-Tax Act, 1961, which requires the Central Government to prescribe specific accounting standards that have to be followed by the assessees for the purpose of income-tax computation.

"There is also a strong need for harmonisation of accounting standards within various legislations.

"For example, Section 145 A of the Income-Tax Act is in conflict with AS-2 (Accounting for inventory valuation).

"Both these prescribed standards have taken differing accounting positions on the same aspects," he said.

This point was not accepted by Mr V. Rajaraman, past-President of ICAI and Member, Central Direct Taxes Advisory Committee, who felt that there might be valid reasons as to why departures had been made in fiscal laws on certain accounting requirements as compared to those in the Companies Act.

"The objective of fiscal laws such as Income-Tax Act is completely different from that of the Companies Act and, therefore, departures in accounting requirements may be necessary," he said.

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