The Institute of Chartered Accountants of India (ICAI) has announced that companies holding derivative contracts must provide for losses on them on a mark-to-market basis. Prior to this announcement, the standard for derivatives (AS 30) was to be applicable only from April 2011. (“Recommended” from 2009).
AS 30 is still not mandatory, but ICAI maintains that if AS 30 is not followed, the losses must be mentioned separately by the company and failing that, by the auditors, from March 31, 2008 onwards. It will be interesting to see the auditors statements on public financial results this year.
I fully expect companies to dress up their results for this quarter. So it will be very interesting to see which companies have audit notes for non-compliance to AS 30. And where AS 30 has been used, to find out the extent of MTM losses.
