MUMBAI, NOV 22: The exposure draft of the revised accounting standard on inventory valuation, which was pending for the past 17 years, is expected to finally be passed by the Accounting Standards Board in January. "It will definitely come through - maybe with minor changes," Jayant P Gokhale, chairman of the Western India Regional Council of the Institute of Chartered Accountants of India (ICAI) said.The accounting standard on inventory valuation (AS-2) has so far not made been mandatory although the corresponding International Accounting Standard (IAS-2) has long since been made mandatory, according to the ICAI. Of the 15 accounting standards published by ICAI only 13 are mandatory as on date.The draft will have a significant impact on the profits of companies who inflate the value of their stock to show higher profit levels and also those companies who undervalue stock for taxation purposes. "In a recessionary environment the tendency to inflate is more," Gokhale said, refusing to comment on whichwas more prevalent among companies here.By establishing the AS- 2, the ICAI wants to narrow down the large fluctuations which exist in inventory valuation. "It will have a massive impact," Gokhale asserted.The AS-2 could not be made mandatory earlier because of considerable opposition from businesses. However, with globalisation and an increasing number of overseas tie-ups the move to bridge the gap between international accounting standards and standards here is gaining momentum. "Now business houses are being pressurized to follow these standards themselves (not from ICAI)," he said.The draft will have a greater impact because the recent ordinance amending the Companies Act.The Institute of Chartered Accountants of India is part of the Global Accounting Standards '98 seminar being organised in Mumbai from December 1 to December 3.The event will feature eminent speakers from International Accounting Standards Committee (United Kingdom), International Federation of Accountants (Japan), andInstitute of Chartered Accountants of England and Wales among others.
