Most companies are small and medium scale companies
Accounting: Of the 357 companies across the country, only 49 have complied with the Bhutan Accounting Standards (BAS) so far since it was made mandatory to comply with the standard in 2012.
These companies comprise of 18 listed companies, 11 Druk Holdings and Investments (DHI) owned companies, and 20 Small and Medium Companies (SMC).
From the remaining 308 companies, there are two financial institutions, Royal Monetary Authority (RMA) and the T-Bank Ltd. (TBL), and one listed company that are yet to comply with BAS. The remaining 305 are all SMCs.
However, the second Accounting and Auditing Standards Board of Bhutan (AASBB) report (2013-2015) released July this year states that TBL have fielded a consultant to implement it by May 2015, while RMA was hiring a consultant to implement by this year.
The deadline for the listed companies to comply with the accounting system is December this year, failing which they will be penalised.
Company Registrar Karma Yeshey said SMCs have until 2016 to comply with the standard.
According to the AASBB, listed companies are required to implement the accounting standards from January 2013, while SMCs were supposed to comply from January 2014 respectively.
The implementation of the accounting standards, as per the second ASSBB report, demand huge requirement of professional accountants, which is lacking in the country. AASBB is the agency that promotes high quality financial reporting and auditing standards that are consistent with international best practices through the development and implementation of BAS.
BAS is derived from and based on the International Financial Reporting Standards (IFRS), which is a common global language for business affairs to make the company accounts understandable and comparable across boundaries. Companies in the country will be preparing their financial statement as per the international standards.
Although it was launched in 2012, only listed companies implemented it, while others maintained the generally accepted accounting standards (GAAP) and Indian Accounting Standards (IAS) in some cases.
When adopted fully by 2021, there will be greater transparency and accountability, including higher standards of reporting among the companies, which will be useful for the investors and regulators.
Karma Yeshey said such accounting standards would make companies’ books of accounts more transparent, relevant and at par with international companies.
“It can help our companies to invite foreign investors and collaborations as their accounts become more relevant and familiar to outside corporate entities,” the registrar said.
BAS for SMCs in particular, as per accounting standards rules, 2012, is a simplified version of full BAS to be complied by private companies and unlisted public companies. It was launched in 2014.
Rajesh Rai, Phuentsholing