Tuesday, April 8, 2008

The standard makes hedge accounting difficult

AS-30 has a whole set of rules on hedge accounting. The rules are pretty stringent and in many cases it may be impossible to apply hedge accounting because the rules cannot be complied with. This may be so, even if there was a perfect economic hedge.

AS-30? Derivatives? MTM? If you are a keen reader of business news, a lot of these accounting hieroglyphics have been appearing in the past few weeks.

There has been so much noise about accounting policies, but none of it has been music to either companies or investors in listed entities. Business Line attempted to get in touch with tax and accounting giant Ernst and Young (E& amp;Y) to present facts as they are. Mr Dolphy D’Souza, Partner, E&Y, gives us a few important answers taking help from the firm’s knowledge repository.

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