ICAI chairman (eastern region) Subodh K. Agarwal with ICAI president T.N. Monoharan in Calcutta on Saturday. Picture by Kishor Roy Chowdhury

Calcutta, April 1: The Institute of Chartered Accountants of India (ICAI) is working on the formulation of separate accounting standards for financial instruments and derivatives and would be ready with the exposure draft by June this year.

ICAI president T.N. Manoharan told reporters here today that the Reserve Bank of India (RBI) has asked the institute to formulate accounting standards for financial instruments and derivatives since these were gaining importance. ICAI is in touch with market regulator Sebi to prepare the accounting standards.

“Till date, we have created 29 accounting standards for various sectors. The board which sets the accounting standards has already held a series of meetings. The exposure draft for the 30th and 31st accounting standards would be ready by July,” Manoharan said.

He said ICAI would come out with two accounting standards, one relating to recognition and measurement, and the other on disclosure and presentation. The first one will essentially lay down the rules on how to treat the income earned from various financial instruments and derivatives in the balance sheet ? whether at cost price or market price.

The second will suggest ways on how to make information more lucid for shareholders so that they can make sound investment decision on the basis of facts provided in balance sheets. ICAI was also working on formulating accounting standards for local bodies, he said, adding that the draft preface was ready.

Manoharan said separate accounting standards for local bodies were needed to harmonise and improve accounting and financial reporting in these institutions.

The institute is also going in for a branding exercise to promote chartered accountancy as a viable career option and has commissioned the National Institute of Design in Ahmedabad to design a new logo which could be used by the members of the council as a symbol of the profession. The institute plans to come out with advertisements both in print and electronic media to popularise the accounting profession among students.

Lodha case

ICAI today said it had issued a notice to Rajendra Lodha, heading the MP Birla group of companies, contending that a practising chartered accountant could not be involved in day-to-day running of a company.

“We have issued notice to Lodha and others on the basis of complaint received against them and waiting for their response before taking any action on the matter,” Manoharan said.