November 28, 2007
Just when the government is discouraging Indian companies from raising funds from overseas, the US market regulator, the Securities Exchange Commission, has eased norms for raising capital from its market.
A key effort that turned away several Indian companies— reconciliation of its book with US’s GAAP accounting standard—has been removed.The decision is expected to benefit close to 1,100 overseas companies listed in the US, including Indian blue chips like Tata Motors, Wipro, Reliance, HDFC Bank, ICICI Bank and Infosys. Henceforth, these companies will no longer have to publish two sets of accounts, both of which say essentially the same thing, but differ on matters of detail. Importantly, this will vastly reduce the compliance cost to enter the market.
The US regulator has now embraced the global standard, the International Financial Reporting Standards (IFRS), which will find favour with Indian companies.
The Institute of Chartered Accountants of India (ICAI) has already announced that by 2011, all Indian accounting standards will be based on the IFRS.
While it gets easier on the accounting front, disclosures will be nothing less than that demanded by the neardraconian Sarbanes-Oxley Act.
There is no denying that there can be little let up on this front, especially after the Enron controversy a few years ago.