The capital market regulator has noticed that different real estate firms have been using varied methods for accounting revenues.
According to the ICAI, there are two methods of accounting for real estate revenues. The one followed by most companies accounts for revenues according to the stage of completion of construction. If a particular project is half complete, the company will account for half of the project revenues.
What happens in UK in circumstances where there unsatisfactory interpretation of accounting standards ?
It is referred to Urgent Issue Task Force (UITF) which is a subsidiary of the Accounting Standards Board.
The main role of the UITF is to assist the ASB where unsatisfactory or conflicting interpretations have developed (or seem likely to develop) about a requirement of an accounting standard or the Companies Act. The UITF seeks to arrive at a consensus on the accounting treatment that should be adopted, in such cases, in the context of the ASB’s declared aim of relying on principles rather than detailed prescription.
In India, everything is referred to ICAI. We in India are too under-developed that the government relies heavily on ICAI – body responsible for setting standards and the same set of people who audit them !!!
The GOI should establish a proper Accounting Standards setting Framework where there is a distinction between Standard Setters and Auditors. Any unsatisfactory interpretation should not be referred to Accounting Body.
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