India working on uniform accounting standards

India is working towards an international accounting standard which can be followed by all countries including the US, said T P Ghosh, director, Board of Studies, Institute of Chartered Accountants of India.

"There should be one uniform accounting standard. It is not just India but even other countries that have problems with the US' Generally Accepted Accounting Principle (GAAP). We are working towards establishing one uniform accounting standard," he said.

Till now, the Institute of Chartered Accountants of India (ICAI) has taken a position towards International Financial Reporting Standards (IFRS) and not GAAP.

The need to have a uniform accounting standard arises from the fact that many of the capital markets in the world are globalised today. The New York Stock Exchange has 459 non-US companies and 17 per cent of the companies listed at the London Stock Exchange are foreign.

Changes would also have to be made to the current Indian accounting standards, said Ghosh. Accounting Standard 11, for instance, is not in accordance with IRFS and needs to be changed. "We will have to change it some day," he added.

Accounting Standard 15, which is ICAI's new accounting standard, too, poses problems for Indian companies. According to it, companies have to calculate retirement benefits in the form of gratuity, leave encashment benefit, and pension for employees on the basis of the salary last drawn by them.

This is in variance with the present practice, wherein the gratuity and pension payable to employees is calculated on the basis of their current salaries, but the actual payment is made on the salary last drawn by employees.