Urvish Paresh Mehta
Being CA students, Accounting Standards are one of the first things that fascinate us. It is surprising to deliberate upon the fact that how some pages of text can govern the complex realm of Financial Reporting, which witnesses a plethora of alternatives and challenges. The concepts of Accounting Standards carry a lot of importance and significance (can also be read as ‘weightage in exams’), and hence they form a very instrumental part in shaping our careers.
However, the usage of Accounting Standards, by any chance, isn’t restricted to Financial Reporting alone. The reverberations of AS are felt in the state of human life as well. The rhythms which AS advocate also find resonance in our day-to-day living. Reading AS with a slightly philosophical mind opens up new vistas, which if implemented in the course of daily life, are worth pondering upon.
AS-1 (Disclosure of Accounting Policies) advocates three buzz words – Going Concern, Consistency and Accrual. Similar to Going Concern Assumption, human beings too have to endeavour to learn as if there’s no end to life. There must be ‘consistency’ in our behavioral patterns, sans the adversities or successes that come our way. We need to account for our good deeds, only when they ‘accrue’, and not any time before that. AS-2 (Valuation of Inventories) expounds on ‘FIFO’. In the context of our life, it means that there is no point in clinging on to our past. Unless we are willing to stop looking back, we cannot march forward. Our life, just like Valuation of inventory, has to be progressive. AS-3 (Cash Flow Statements) lists down two methods – Direct and Indirect. The lesson – Not everything in life can be achieved directly. Sometimes, by equating the wavelengths of heart and mind, we need to act slightly differently to achieve our goals.
AS-5 (Net Profit or Loss for the Period, Prior Period Items and Change in Accounting Policies) has an adage attached to it. As like a P&L Account, our lifespans too will consist of both ‘Ordinary’ and ‘Extra Ordinary’ items. There will also be memorable moments, even amongst monotony! AS-6 (Depreciation Accounting) and AS-10 (Accounting for Fixed Assets) advocate that not only Fixed Assets undergo depreciation. The wear and tear of everyday life is also felt by both body and soul. We cannot keep ignoring that, or else there will be more ‘Suspense’ than what we can handle! AS-7 (Construction Contracts) encourages us to have a constructive attitude towards life. AS-9 (Revenue Recognition) preaches us that we must count our blessings regularly. AS-11 (Changes in Foreign Exchange Rates) gives a sermon that the externalities are always going to be volatile, the adjustments to counter them have to come from within!
AS-12 (Government Grants) promulgates that sometimes help comes in rather unexpectedly. God, like government, is not a mere regulator but also a well-wisher! The only thing to remember is that ignition should come from inside. AS-13 (Accounting for Investments) states that Pre-Acquisition interest cannot be shown as revenue. In the same vein, what is not ours is strictly not ours.
AS-14 is yet another interesting twist in a mortal’s life. We cannot think of a better AS to describe ‘marriage’ rather than AS-14 – Accounting for Amalgamations! One relates to unification of two hearts and bodies, while other, very similarly, relates to unification of two body corporates. Some conditions need to be fulfilled on both sides for a prosperous married life. But moreover, the wavelengths must match, or else demerger is not too far away! AS-15 (Employee Benefit Costs) preaches that our life is measured on the yardstick of how well we treat our subordinates. AS-16 (Borrowing Costs) states that we cannot always be self-sufficient. It is not wrong to ask for external help sometimes.
AS-17 (Segment Reporting) enables us to understand that there should be a detailed analysis of every task we undertake, whether personal or professional. Segregation is sometimes the best answer to all our problems. AS-18 (Related Party Disclosures) guides us that personal relations are important, but not at the cost of other stakeholders. AS-19 (Accounting for Leases) enables us to know that ‘a new lease of life’ does not necessarily come from ownership of things. AS-20 (Earning per Share) gives a hint that no matter what we achieve, eventually it’s what we leave behind for others which matters. AS-21 (Consolidated Financial Statements) proves that the sum should always be greater than mere addition of components. AS-22 (Accounting for Taxes on Income) assists us to comprehend that the society too has a valid claim on our earnings.
As advocated by AS-26 (Intangible Assets), our principles, beliefs, convictions, and above all, our culture are our real assets. They rank above any monetary possessions. It is our culture that sets us apart. When in doubt, our beliefs are the shining beacons in times of despair.
Then comes the old age (also known as the Second Childhood), when ‘Impairment of Assets’ (AS-28) takes place. Body parts don’t function as they previously did. However, it is a fanciful time to witness the younger generation take lead. It is that time to view the world with rose-tinted spectacles. It is that time when there should be no regrets and no second thoughts that life could have been better. When death knocks, (AS-24; Discontinuing Operations) the spirit should be proud that it lived in a jolly body!
All in all, the state of being is about AS-29 (Contingent Assets and Contingent Liabilities). We ourselves do not know what the next moment in life will bring along. No amount of planning can suffice the uncertainty of living. However, the adventure of life lies here. We need to understand that life is a roller-coaster ride, but without railings. So, enjoy every moment, since the lost moments are not Prior period Items (AS-5) which can be rectified time and time again!!