INSUBCONTINENT EXCLUSIVE:
The stock market rout due to the Covid-19 could trigger a different kind of a face-off between sections of India Inc promoters, shareholders
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, their audit committee members have been engaged in discussions with their auditors about how to resolve this
thorny issue by the time the annual results are announced
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
Managements and promoter shareholders often argue that the slide in value is temporary and caused by market forces beyond their control
Some experts agree with this view
impairment cannot be shrugged off
official in one of the major conglomerates.
He added that in many cases companies and conglomerates are roping in an independent expert to
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
explained that the share price of one of the subsidiaries of a company had grown four times over the years
this company is worth even the investment that has gone into it, the answer may have been simple but fall in sales is just not helping the