The Indian Premier League (IPL), which began a trend of auctioning cricketing talents by its franchises, seems to have signaled the beginning of a possible accounting issue in future. At least, the country’s apex accounting standards setting body, Institute of Chartered Accountants of India (ICAI), believes so.
With sport events such as IPL turning into money-spinning ventures, ICAI has decided to look into the ways and means of calculating the fair value of “talents” hired by the sports “industry”. How to account for such “assets” that can even turn “liabilities” or how to put a “fair value” over such talents are all issues that would be discussed by ICAI’s research team this year.
“These are emerging areas for the accounting profession. With the kind of development taking place in the sports and entertainment industry, one has to take a futuristic view and identify the possible accounting issues related to talents,” said a professional expert who is part of the research.
Sports and entertainment are not the only research areas of current interest to ICAI. The spread of organised retailing and the increasing trend among organised business establishments to launch loyalty programmes are also expected to pose accounting challenges in future.
“The systems of discount cards, coupons, that can be redeemed in any franchise, anywhere, are all newly emerging practices,” said Bhavna Gautam Doshi, chairperson of ICAI’s research committee.
The recommendations of ICAI’s research committee can lead to newer accounting standards or new guidelines to existing ones. It has the mandate to collaborate with other institutions like the management institutes, universities, financial institutions, corporate bodies and professional institutes at the national and international levels.
The ICAI research committee is in the process of preparing technical guidelines on accounting for Special Economic Zone development activities and on revenue recognition for telecommunication companies. It is also working on a revised guidance note on accounting for oil and gas producing companies.
A revised technical note on accounting and auditing in not-for-profit organisations and non-governmental organisations is also nearing completion. A study on common discrepancies in financial reporting is another area of ongoing research.
source : business standard