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Reporting Currency of Financials


Sandeep C

2013-10-05

Hi Friends,

Kindly share me the extract of Act or Rules or Noification or Circular or Citation, if any for the Below query:

Is Financial Statements of Indian Company should in Rupees Only?

Is Share Capital of Indian company should be in Rupees?

Note: I am looking for extract from Act or equivalent to Act. AS 11 didnt helps me.

CA Pulkit Sharma

2013-10-05

It is understood that Financials are prepared for Indian companies so it should be made in using INR. However if you read the guidance notes on revised schedule vi issued by MCA, you will see that although Foreign liablity and Expenditure are required to be disclosed in financials but along with conversions.(Note 11.2.2).

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CA Pulkit Sharma

2013-10-05

Extract of Note11.212

11.2.2 In this particular case, the disclosure is to be made with regard to the
expenditure in foreign currency. Consequently, if no foreign currency
expenditure is involved, no disclosure would be required, even though the
specific services covered by this requirement have been imported free of
cost or against Rupee payment or against any other method of payment or
adjustment not involving the expenditure of foreign currency. Although the
disclosure is required to be made with regard to items involving expenditure
in foreign currency, the amount to be disclosed would be the Indian Rupee
amount. It should be noted that every company is required to follow accrual
system of accounting and the requirement refers to ‘expenditure’, the
disclosure should be on the basis of the expenditure incurred and recorded in
the books of account and not on the basis of remittance. The appropriate
Rupee figure can be obtained by converting the foreign exchange figure
through the application of a rate of exchange which is suitable for that
purpose, having regard to normal principles of foreign currency
translation/conversion in accounts. If so desired, the foreign currency figure
may also be given as additional information but this cannot be regarded as
mandatory.

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Sandeep C

2013-10-05

Hi Pulakit,

Thanks for your reply.

What i am looking is: Which Act or Which Rule or Which Notification Or Which citiation from Government of India Speaks about the reporting currency of Financials.

Normally/Logically Indian companies use Rupees as reporting currency. But i am looking for the root. From Which law it comes from. 

Request  to share if any one knows.

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CA Pulkit Sharma

2013-10-05

I am not sure of this. But have to really research on this. Though logicaly it can be answered but, if you talk of Law/statue etc. i have to research on this.

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Vedanta Deshika

2013-10-06

Sandeep. Indian GAAP is the authority which governs preparation of financials as well as maintenance of books of accounts of all indian companies. We can say that INR is the functional currency which is of dominant nature prevailing in the domestic market. Moreover, for the purpose of taxation it is implied by law that we need to maintain books in INR. 

However, after introduction of IND AS (converged), there is neither any obligation to adopt INR nor any descretion left out for chosing the reporting currency, since the functional currency concept is going to be introduced. 

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CA Pulkit Sharma

2013-10-07

Agree with vedanth. @sandeep did you get something on this matter?

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