Telecom companies likely to have new accounting norms soon

The Institute of Chartered Accountants of India (ICAI) is in the process of clarifying the procedure for accounting of these peculiar transactions for which there is no precedence.

"We will issue explanations and clarifications as to how to record certain transactions which are innovative in nature," said ICAI President Ved Jain.

He said telecommunication is a new area where different kinds of agreements are being inked and there are problems of recording transactions like life-time incoming or prepaid card with full talk value in the books of accounts.

Such transactions have been creating a lot of problem and chief financial officers of various companies have approached ICAI for clarifications, Jain added. Therefore, as a proactive measure, Jain said, "We have created industry-specific sub groups to address accounting issues arising in each industry like SEZs, oil, power, telecom and infrastructure."

The ICAI has recognised few companies and has asked their CFOs to be a part of the groups formed by it, the report of which will be tabled in three to four months, he said.

He acknowledged that looking into the peculiarity of the agreements telecom companies are entering into, accountants don't have answers to certain issues. Issues relating to towers, licence fees etc have cropped up.

For example, he said, licence fees, which is paid to the government by telecom companies, is a capital or a revenue expenditure, is the issue troubling CFOs of such companies.