forex losses till ’11

In a big relief to India Inc, the Government is believed to have accepted the recommendations of the National Advisory Committee on
Accounting Standard (NACAS) to defer the mandatory implementation of accounting standard 11 (AS-11) that deals with foreign exchange differences.

According to official sources, the government will shortly issue a notification, giving corporates an option to not report numbers as per AS11 that stipulates them to recognise foreign exchange losses in the profit and loss (P&L) accounts every year. "The Government has agreed with the recommendations of NACAS that suggested deferring the implementation of AS-11 to 2011," the sources said.

AS-11 deals with mark-to-market provisioning in corporate profit and loss accounts for foreign exchange-related gains and losses. Refusing to take a hit on their profits, many corporates were complying with Schedule VI of the Companies Act that allows them to forego AS11. Already reeling under recession, a majority of the firms are reluctant to show the losses originating from rupee-dollar rate fluctuations in their balance sheets as it will further damage their credibility.