Mukherjee asks chartered accountants to apply accounting standards uniformly

KOCHI - Union Finance Minister Pranab Mukherjee has asked Chartered Accountants to apply accounting standards uniformly and assist in presenting the true picture of the financial health of the company while ensuring accountability in all aspects.

“We should not fiddle with accounting standards, even if financial performance of a company is volatile,” Mukherjee said while addressing the 42nd Annual Conference of Southern India Regional Council of the Institute of Chartered Accountants of India (ICAI) here on Saturday.

He said that standardizing of the accounting practices help in mitigating the problem of information asymmetry between various stake holders such as managers, owners and creditors.

“While managers have the incentive to be more forthcoming on good news about the company’s performance and prospects, they may want to hold back bad news. But the accountants as information intermediaries between managers and shareholders need to identify and recognise losses at an early stage, thereby mitigating asymmetry in information,” he added

Emphasizing that as India gets more integrated with the global economy, Mukherjee said: “We must have stronger disclosure standards in keeping with the international best practices.

“We must also build stronger supervisory frameworks to provide incentive for more responsible corporate conduct. The chartered accountants must be aware that the Ministry of Corporate Affairs has brought out voluntary guidelines for corporate governance in December 2009,he urged all companies to adopt this guideline in the spirit of self regulation,” he added.

He said that recently there have been instances where the auditing community has been found wanting in its professional propriety while valuing complex financial products.

He further said that he is confident that ICAI as a mentor will plug those loopholes.

“Must promote and encourage ethical use of information by avoiding, controlling and disclosing conflicts wherever they arise. While doing so we should ensure that the procedures established to control conflicts are not porous,” he added.

Concluding his address Mukherjee said that as the Government and the market regulators continue to exercise vigil on the markets, it is up to the other stakeholders to contribute their share in ensuring good governance.

“Good governance makes for growth and long term sustainability in business,” he added. (ANI)