AS WE age, we experience second childhood, said Aristophanes. So, it's no surprise that the Institute of Chartered Accountants of India (ICAI) has released an exposure draft on `accounting by schools', rather than gun for a topical one such as on accounting for attrition rate in BPOs, if not on the hotter issue of verification of retirement age of political leaders.

Before you get your slate and sling-bag ready, please know that `school' includes "a pre-primary, primary, middle and higher secondary school, and also any other institution which imparts education or training below the degree level, but not an institution which imparts technical education." Which means, kids are off bounds in IP Marg premises, though auditors may now be found straying in classrooms.

If you want to know what provoked the Institute to come out with a pronouncement like this, it's because they've found that "schools form the foundation of the entire education system of a country", and that how they teach what they teach there "is of prime importance in determining the quality of manpower." Ah, how one wished the Institute paid attention to the way it imparts education to CA students!

The ICAI has found that the basis of accounting followed in schools is neither uniform nor generally based on accrual basis. But the language of accounting can often be cruel to children's comprehension. Thus, for instance, "A calculator purchased by a school for its use, costing Rs 100, can be recognised as an expense in the year of purchase, although it fulfils the definition of a `fixed asset', in case, considering the value of its other assets, revenue and its surplus, the size of the amount of Rs 100 is not considered material."

It happened. When an auditor pestered his client with unending queries on capital and revenue, on current and fixed assets, the client shouted in exasperation, "You're a fixed liability!"

Quite ambitiously, the proposed Guidance Note is applicable not only to educational activities of schools but also other incidental activities such as "provision of hostel facilities, canteen facilities, transportation, books and stationery, and so on." I can already see worried children stashing away their pocket money, lest the auditor ask them to account for their nickels and dimes.

For providing prolonged occupation to our experts on the job of drafting pronouncements, it would have been better if the guidance of the ICAI had steered clear of hostel, canteen, bus, excursion, temple, cultural, sale and so on, and attacked those topics in separate exposure drafts!

Schools are for learning, we know; but it may be of interest to learn that the word `learn' doesn't figure in the close-to-one-lakh bytes pronouncement.

No surprise, again, because learning is one thing, and accounting, different. If you're unwilling to go to school, as most children are, there's the Mulberry Bush nursery rhyme I'd suggest as an appendix to the guidance note:

"This is the way we go to school,/ Go to school, go to school,/ This is the way we go to school,/ On a cold and frosty morning... "

But there're the rebellious ones who demand the inclusion of what the Duchess of York told King Richard III: "Thou camest on earth to make the earth my hell. A grievous burthen was thy birth to me; tetchy and wayward was thy infancy; thy school-days frightful, desperate, wild, and furious, thy prime of manhood daring, bold, and venturous, thy age confirm'd, proud, subdued, bloody, treacherous... "

AccountSpeak@TheHindu.co.in

D. Murali

© Copyright 2000 - 2009 The Hindu Business Line