The Institute of Chartered Accountants of India has proposed a revised guidance note on ‘accounting of political parties’, raising the bar on the quality of financial disclosures.
The exposure draft of the new guidance note and the revised version is more “elaborate and clear”. The exposure draft incorporates the provisions of various Acts relevant to political parties and guidelines issued by the Election Commission in this regard.
An important aspect is that Qualitative Characteristics of financial statements have been explained within the Guidance Note. It has also spelt out accounting treatment for electoral bonds, a new source of funding.
For the first time, political parties will now be required to disclose the nature and type of services-in-kind received by them. However, they may not be required to measure the same.
The revised Guidance Note pertains to accounting aspects only. The “Standards on Audit issued by the ICAI” are applicable to all audits and ICAI will consider at appropriate time any specific guidance required for audit of Political parties.