INSUBCONTINENT EXCLUSIVE:
Mumbai: The stock market rout due to Covid-19 could trigger a different kind of a face-off between sections of India Inc promoters,
shareholders and their auditors
The massive fall in share prices of key companies that are subsidiaries of holding firms or other big companies is leading to heated
discussions and debate on how to account for this fall, with auditors likely to take a dim view of any attempts to obfuscate reality
Boards of some big companies and their audit committee members have been engaged in discussions with their auditors about how to resolve
investments in the present scenario
In the standalone financial statements, impairment will be triggered if the market price falls below the carrying value of an investment
said Khazat Kotwal, partner, Deloitte.
Asset impairment happens when the market value of that asset is lower than the value listed on the
Companies are supposed to write down the value of the asset on their books if it falls below the investment value but in reality this is
easier said than done.
Managements and promoter shareholders often argue that the slide in value is temporary and caused by market forces
flows means that the question of impairment cannot be shrugged off
official from a major conglomerate.
He added that in many cases companies and conglomerates are roping in an independent expert to value the
several such situations.
In this situation, management and auditors are finding themselves in opposite corners.
Many companies and
for asset impairment but auditors are saying that since the impairment trigger has been raised after fall in share value below investment
how the underlying business is doing and they have to take a judgement call on asset impairment