COVER STORY
Forex Hedge Accounting: Creating Cost and Revenue Certainty
-- R Sridhar and B Janaki
Tapping into the global economy can be an effective way to expand business. However, foreign exchange rate
volatility plays a vital role in the success of a company's international business, by contributing unexpected profits or
losses. Hedge accounting is a flexible tool of profit/loss account management, designed for companies that bear risks
associated with currency, commodity or interest rate. By implementing hedge accounting, a company gains a possibility
of excluding itself from profit/loss account, and the effects of valuation of instruments are used for hedging
purposes. Hedge accounting is permitted in certain cases, where hedging relationships are clearly defined, reliably measured
and are actually effective. Hedge accounting is optional and management, while deciding whether to use it or not,
should also consider the costs and benefits.
© 2009 The IUP. All Rights Reserved. ACCOUNTING
Accounting for Intangibles
-- Neeru Banerjee
The HR is in the midst of a fundamental shift, from being a cost item on the balance sheet to being a partner to the
profit center. With human capital boom and increasing contribution by knowledge workers to the world's economy, the
HR is experiencing a sea change in its role as the strategic business partner. There had been a constant pressure to justify
its Return On Investment (ROI). Now, there is an added responsibility to establish the highly intangible ROI from
its intellectual assets. Although there are numerous advantages in developing measuring tools to establish the claims
on the organization growth through HR effectiveness, there are various deterrents which need to be addressed in order
to make Human Resource Accounting, a widespread practice. The Indian organizations are responding to this trend and
are finding out ways to prove its worth of knowledge in actual numbers.
© 2009 The IUP. All Rights Reserved. ACCOUNTING
Intangibles Accounting: Issues and Dimensions
-- Shigufta Hena Uzma and
JP Singh
`Accounting for intangibles' has always been a conscientious issue for accounting bodies across the globe.
Regulatory provisions in this regard have been few and far between. However, with the advancement in corporate
governance practices, standardized norms relating to accounting and reporting of complex financial positions, including
intangibles like goodwill, brand values, patents, etc., are mandated to minimize asymmetries in the disposition of
financial information by corporates (of which, there have been many in the last two decades). A lead in this direction was
taken by the Financial Accounting Standards Board (FASB) of the USA by pronouncing the Financial Accounting Standard
142 (FAS 142) titled `Accounting for Goodwill and other Intangibles' which is adopted by all US-based entities for
fiscal years beginning after 2001. In this article, we highlight some of the issues that are controversial, ambiguous or
need further refinement insofar as intangibles accounting is concerned. We also discuss the corresponding accounting
and reporting requirements under the Indian laws and the relevant International Accounting Standards.
© 2009 The IUP. All Rights Reserved. FAIR VALUE ACCOUNTING
Indian Agricultural and Rural Sector: Fair Value Accounting and Audit Challenges
-- Padma Srinivasan and
Atul Banga
This article analyzes the need of accounting in the agricultural and rural sectors and where and how it can be useful
for the people, totally dependent on the agricultural and the rural market. India has achieved self-sufficiency in
milk production and agriculture-related businesses. Agriculture and food production have been the `highest priority'
of economy development initiatives of India. The agenda here is to understand the need for professional management
of agricultural accounts and audit requirements. There is an imminent requirement for a dedicated accounting standard
to be complied in conjunction with International Accounting Standards (IAS) requirement.
© 2009 The IUP. All Rights Reserved. BUSINESS ENVIRONMENT
Overhauling Your Fixed Assets
-- Alexi Colyvas
Ever since the adoption of International Financial Reporting Standards (IFRS) in South Africa in 2005, and even more
so with the impending adoption of Generally Recognised Accounting Practice (GRAP) in the public sector, many
entities in both the private and the public sectors have been finding the need to reconstruct their fixed asset registers.
© 2009 This article was first published in June, 2009 issue of AccountancySA (www.accountancysa.org.za). Reprinted
with permission.
BUSINESS ENVIRONMENT
Another Accounting Postmortem
Satyam (MAYTAS)
-- VV Raju
This article discusses the recent fiasco of Satyam Computers, its financial and accounting frauds, from different
perspectives. It also ponders on the intention behind Ramalinga Raju's actionsethical issues related. Further, it tries to ascertain
the loopholes in the legal fraternity, political factors and influences, and disappearing moral values. It finally tries to
draw a conclusion that due to such happenings, people tend to lose their faith in corporate institutions.
© 2009 The IUP. All Rights Reserved. ACCOUNTING
Uniform System of Accounting for Hotel Industry and Other
Commercial Industries: A Comparative Study
-- Atul Bansal and Shweta Bansal
Uniform System of Accounts for Hotels is a manual that provides, firstly, uniform classification of income,
expenditure, assets and liabilities for hotels and secondly, a standardized, uniform method of presenting financial results of
operations. This manual was prepared in order to bring uniformity in accounts in hotels, irrespective of their size. The need for
such a classification was being felt by hotels since long. In 1925, the Hotel Association of New York City appointed
a Committee of Hotel Accountants to prepare a manual, showing a simple formula for the classification of accounts.
This committee prepared a common manual both for large and small hotels, showing uniform classification of
financial statements. This manual of instructions has been adopted by Indian hotels.
© 2009 The IUP. All Rights Reserved. SPEECH
Speech by SEC Staff: The Future of Financial Reporting
-- William Lutz,
Director,
21st Century Disclosure Initiative US Securities and
Exchange Commission,
New York.
Financial reporting is the key to success for any company. Lack of transparency and accessibility of information
leads to stress with the investors. Disclosure of information is basically visible from proxy statements, fund prospectus
and operating and investment company's annual reports. The disclosure information would be tagged, using either
XBRL or some other common language, by which the investors would be able to get data immediately and would be able
to do targeted search, sort, and comparisons. The future of financial reporting should be transparent and available to
all the investors.
© 2009 US Securities and Exchange Commission (www.sec.gov). Speech by William Lutz, Director, Conference
Co-sponsored by National Investors Relation Institute, New York, January 15, 2009. Reprinted with permission.
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