Amid the global financial pressures, the Ministry of Corporate Affairs wants expeditious notification of standards on financial instruments like derivatives so that companies make proper disclosure of such exposures in their account books.
"The Ministry has asked the National Advisory Committee on Accounting Standard (NACAS) to speed up the work on the notification of AS 30, 31 and 32 and probably within a month's time it will have its final meeting on these standards," a senior ministry official told PTI.
These accounting standards, which are initially recommendatory in nature and will become mandatory after 2011, will need companies to make disclosure of such instruments in their financial statements.
The ministry has sought the Reserve Bank of India's advice on the transition period because banking and non-banking financial companies and financial institutions will be most-affected after the notification of standards, the official added.
The official added that the exposure of India Inc in the global financial crisis is not large, so at present the ministry is not mulling on making these standards mandatory from its very inception.
Because of multi-layered derivatives erstwhile gigantic financial institutions in the United States had to pack up and still it is not clear what would be the total amount of loss due to financial crisis and which other institutions will succumb to it.
National Advisory Committee on Accounting Standards is also in talks with the RBI and after consulting with the central bank, it will go to the finance ministry for its view.
Accounting Standards (AS) 30, 31 and 32 pertain to recognition, measurement and presentation of financial instruments like derivatives, loans and receivables and bonds -- both held to maturity category and available for sale.
The apex accounting body ICAI said in view of the recent financial crisis, the institute would welcome the early adoption of these standards as that would strengthen the disclosure practice.
At present, not all companies properly record such transactions in their account books.
The official said after the meeting of NACAS, the ministry would do an internal assessment of these standards and by December the accounting standards would be notified.
NACAS is a central government body which notifies the accounting standards cleared by the Institute of Chartered Accountants of India.