Under AS-29 on measuring provisions, it mandates that the effect of possible new legislation should be considered while measuring a liability, when sufficient objective evidence exists that the legislation is virtually certain to be enacted. However, recognizing the inherent uncertainty in the whole process, the standard itself admits that in many cases, sufficient evidence will not exist until the new legislation is notified. Even while perusing through infrastructure companies annual reports/public filings(an industry with multiple laws relating to land reform/coal pricing/gas allocations etc), I did not notice any such provision anticipating pending laws, with companies instead preferring to recognize it as a liability. The reason for this is
- Proposals/news leaks often remain 'in the air' without concrete action. Sometimes, I feel that bureaucrats merely leak proposals to get a riskless preview of public reaction, and then modify the final proposals to please their political masters.
- Long time to pass any legislation especially sensitive ones. Opposition holding up the House for trivial issues, does not make things easier.
- Executive has powers to notify the effective date of the law, and as examples of the Competition Act 2002/Benami Property Act etc would show, many 'hot potatoes' may make it through Parliament and the President's sanction, but not beyond that
- Devil in the details-delegated legislation-many laws especially economic/securities laws rely heavily on delegated legislation, which do at times, vary from the popular meaning/understanding.