The Institute of Chartered Accountants of India (ICAI) would be giving its final report on the accounting format for political parties to the Election Commission of India (ECI) in a fortnight. ICAI has already given its draft report to the ECI. It is worth mentioning the Election Commission of India has approached the Institute of Chartered Accountants of India (ICAI) to frame accounting formats exclusively meant for political parties.

In an interaction with Business Standard, ICAI President Amarjit Chopra who was in the city said, The accounting format once made mandatory, is expected to bring in more financial accountability of political parties and moreover it will bring in a culture of transparency. Corporate funding is one of the major sources of income for political parties to carry out their activities, including election campaigns. According to me, funding to political parties should be treated as expenditure in order to increase transparency in financial statements.

He added, the ECI has entrusted us with the responsibility of formulating the guidelines as the Commission wants the accounting standards and auditing and assurance standards adopted by us to be made applicable to the accounts and audits of the political parties as well. He added, Many companies direct the funds by creating trust and finally handing over the money to political parties through trust. The new format will check the black money. He also recommended rotation of auditors for accounts of political parties.

On being asked about the implementation of the International Financial Reporting Standards (IFRS), originally scheduled for April 1, 2011, Chopra said, We have already made its submission, including 35 standards regarding this, to the National Advisory Committee on Accounting Standards and to the Ministry of Corporate Affairs, which is yet to be notified.

He said the industry bodies, which are now seeking more time, were part of the consultations throughout, as were the 300-odd companies that are supposed to implement IFRS in Phase-I. He also informed, ICAI has hosted a number of national seminars on the new legislations in taxation and corporate accounting at various locations to impart knowledge to its members. He mentioned, Already 45,000 members have attended these seminars, and 2,700 members have been given certificate related to IFRS.The adaptability (of the chartered accountants) for the new legislation is not an issue at present. This would require a change in the mindset of the accountants from a traditional, historical cost-based accounting to a fair-value business accounting.

He informed, IFRS will be rolled out in a phased manner with only those companies which have an annual turnover of Rs 1,000 crore or more falling under the purview of IFRS in the first phase. Companies having a turnover less than Rs 500 crore would be kept outside the purview of IFRS.

He said, ICAI has proposed to set up a Centre for Excellence in Bangalore, Jaipur, Aurangbad and Mohali (Punjab). While land has already been acquired in Bangalore and Jaipur, it is yet to be acquired in Aurangabad and Mohali.