To emphasize:
What auditors do is to ensure that there is no material misstatement in the financial statement. Auditors are not confirming that the financial statement is accurate.
No material misstatement vs Accurate
The key word " No material misstate" allowed a certain level of tolerable error in the financial statements. (i.e. a certain level amount of acceptable errors, which are not going to affect financial statements users' decision-making)
The key word " accurate" required one to ensure that the financial statements are 100% or 99% correct. Higher level of responsibility and associated risk would be exposed by the auditors, if they are using the word, " accurate".
#15- Can auditors draft Financial Statements for client?
Can auditors draft (i.e. prepare) the financial statements for clients ?
The answer is No.
As mentioned in post #10, the nature & the responsibility of an auditor is to check, to scrutinize the financial statement prepared by the clients is not materially misstated. Auditors are the investigators.
Self-review threat to auditors' independency would be created if auditors are checking on what the auditors themselves are preparing. Auditors are supposingly to exercise its professional due care ( in ensuring integrity) & competence to ensure the accuracy of the Financial Statements.
The answer is No.
As mentioned in post #10, the nature & the responsibility of an auditor is to check, to scrutinize the financial statement prepared by the clients is not materially misstated. Auditors are the investigators.
Self-review threat to auditors' independency would be created if auditors are checking on what the auditors themselves are preparing. Auditors are supposingly to exercise its professional due care ( in ensuring integrity) & competence to ensure the accuracy of the Financial Statements.
#Joke-Accountants don't read novels
Why do accountants make good lovers?
They're great with figures.
Why accountants don't read novels?
Because the only numbers in them are page numbers.
They're great with figures.
Why accountants don't read novels?
Because the only numbers in them are page numbers.
#14 Foreign Currency Translation Reserve
In this thread, let's look at the accounting for unrealized exchange differences.
Assuming, XYZ Co. ( a China based company) hold 100 US$ balance on hand ( and assuming foreign exchange rate is: 1 USD= 1.5 RMB)... In XYZ Co. the Cash account balance at this time would be:
US$ denominated cash = RMB 150
One month later, China's currency has appreciated to 1USD= 1.2 RMB, the XYZ Co. have to make the following adjustments:
Dr. Unrealized exchange difference loss 30
Cr. Cash 30
<>
The term unrealized is used in this case is because there wasn't any transactions took place, it's merely a mark-to market exchange rate practice. Hence, we called it unrealized forex losses.
Assuming, XYZ Co. ( a China based company) hold 100 US$ balance on hand ( and assuming foreign exchange rate is: 1 USD= 1.5 RMB)... In XYZ Co. the Cash account balance at this time would be:
US$ denominated cash = RMB 150
One month later, China's currency has appreciated to 1USD= 1.2 RMB, the XYZ Co. have to make the following adjustments:
Dr. Unrealized exchange difference loss 30
Cr. Cash 30
<>
The term unrealized is used in this case is because there wasn't any transactions took place, it's merely a mark-to market exchange rate practice. Hence, we called it unrealized forex losses.
#13 Is Unutilized Investment Allowances DTA?
Should untilized investment allowances be recognized as Deferred Tax Assets?
It is now generally agreed that unutilized investment allowances should be recognized as Deferred Tax Assets. The unutilized investment allowancs may come under IAS 12 paragraph 34, depends on the fact and circumstances.
Companies that have not been recognising DTA in respect of unutilised investment allowances in the past may need to do so (subject of course to the probable future taxable profit test). This would be a change in accounting policy.
It is now generally agreed that unutilized investment allowances should be recognized as Deferred Tax Assets. The unutilized investment allowancs may come under IAS 12 paragraph 34, depends on the fact and circumstances.
Companies that have not been recognising DTA in respect of unutilised investment allowances in the past may need to do so (subject of course to the probable future taxable profit test). This would be a change in accounting policy.
Microsoft Coffee Table PC
Is there really a market for this thing; I can't imagine having such an intrusive thing in my living room...
Microsoft to unveil 30-inch touch screen computer - May. 30, 2007
Microsoft to unveil 30-inch touch screen computer - May. 30, 2007
Microsoft unveils coffee table 'surface computer'
Software maker will introduce a coffee-table-shaped computer that has a 30-inch display, allowing people to touch and move objects on the screen.
May 30 2007: 2:42 PM EDT
SEATTLE (Reuters) -- Microsoft Corp. will unveil a coffee-table-shaped "surface computer" Wednesday in a major step towards co-founder Bill Gates's view of a future where the mouse and keyboard are replaced by more natural interaction using voice, pen and touch.
Microsoft Surface, which has a 30-inch display under a hard-plastic tabletop, allows people to touch and move objects on screen for everything from digital finger painting and jigsaw puzzles to ordering off a virtual menu in a restaurant.
surface.03.jpg
Microsoft's coffee-table-shaped "surface computer" hopes to one day replace the mouse and keyboard with voice recognition, pen and touch.
It also recognizes and interacts with devices placed on its surface, so cell phone users can easily buy ringtones or change payment plans by placing their handsets on in-store displays, or a group of people gathered round the table can check out the photos on a digital camera placed on top.
Microsoft (Charts, Fortune 500), the world's largest software maker, said it will manufacture the machine itself and sell it initially to corporate customers, deploying the first units in November in Sheraton hotels, Harrah's casinos, T-Mobile stores, and restaurants.
Microsoft's 150-lb computer: What's the point?
#12 Job Advertisement Analysis ( Singapore)
Seniors/Assistant Managers/Managers, Audit Department
The incumbent will work with a team of audit professionals in the Audit Department, providing audit services to a portfolio of diversified clients comprising public listed companies, MNCs, and local conglomerates. The successful candidate can also look forward to other challenges including initial public offerings related work, due diligence and special investigations work.
The above positions in the Assurance & Advisory Services call for candidates with an accounting degree/professional qualification recognised by the Institute of Certified Public Accountants of Singapore (ICPAS). You should have at least 3 years of relevant audit experience in a professional practice. The level of appointment will commensurate with experience.
< Note: Ｔｈｅ ｐａｒａｇｒａｐｈs ｉｎ ｂｌｕｅ ａｂｏｖｅ ｉｓ ｅｘｔｒａｃｔｅｄ ｆｒｏｍ ｅＦｉｎａｎｃｉａｌ Ｃａｒｅｅｒs ｓｉｔｅ＞
This blog entry is intended to provide some snapshot about career opportunities in Big 4 Singapore, audit deparment in particular.
One would realize that the door is always open for highly calibre individual to join the audit firms, especially in Singapore, where demand for auditors are definitely much more than the supply of auditors in Singapore. Big 4 are dominating the auditing services of the SGX-listed ( Singapore Stock Exchange) clients, and this in term imply an endless demand for auditors. The shortage of qualified auditors is intensified by the high turnover rate in the industy, where the working hours could be very long.
One could easily switch among the Big 4 once he/she reached the senior level, as supported by the advertisement above. Besides, Big 4 are happily to accept the Big 4 from medium firm, such as: RSM due to the shortage of seniors in the firm. In short, experience really counts.
The incumbent will work with a team of audit professionals in the Audit Department, providing audit services to a portfolio of diversified clients comprising public listed companies, MNCs, and local conglomerates. The successful candidate can also look forward to other challenges including initial public offerings related work, due diligence and special investigations work.
The above positions in the Assurance & Advisory Services call for candidates with an accounting degree/professional qualification recognised by the Institute of Certified Public Accountants of Singapore (ICPAS). You should have at least 3 years of relevant audit experience in a professional practice. The level of appointment will commensurate with experience.
< Note: Ｔｈｅ ｐａｒａｇｒａｐｈs ｉｎ ｂｌｕｅ ａｂｏｖｅ ｉｓ ｅｘｔｒａｃｔｅｄ ｆｒｏｍ ｅＦｉｎａｎｃｉａｌ Ｃａｒｅｅｒs ｓｉｔｅ＞
This blog entry is intended to provide some snapshot about career opportunities in Big 4 Singapore, audit deparment in particular.
One would realize that the door is always open for highly calibre individual to join the audit firms, especially in Singapore, where demand for auditors are definitely much more than the supply of auditors in Singapore. Big 4 are dominating the auditing services of the SGX-listed ( Singapore Stock Exchange) clients, and this in term imply an endless demand for auditors. The shortage of qualified auditors is intensified by the high turnover rate in the industy, where the working hours could be very long.
One could easily switch among the Big 4 once he/she reached the senior level, as supported by the advertisement above. Besides, Big 4 are happily to accept the Big 4 from medium firm, such as: RSM due to the shortage of seniors in the firm. In short, experience really counts.
#11 Is computer software intangible assets or PPE?
Should computer software be classified as intangible assets or Property, Plant & Equipment?
IAS 38 clarifies that computer software for a computer controlled machine tool that cannot operate without the specific software is an integral part of the related hardware and it is classified as Property, Plant & Equipment.
The same applies to the operating system of a computer and operating systems software. Where the software is not an integral part of the related hardware, computer software is treated as an intangible asset, e.g. application software. For instance, accounting software used for bookkeeping system.
IAS 38 clarifies that computer software for a computer controlled machine tool that cannot operate without the specific software is an integral part of the related hardware and it is classified as Property, Plant & Equipment.
The same applies to the operating system of a computer and operating systems software. Where the software is not an integral part of the related hardware, computer software is treated as an intangible asset, e.g. application software. For instance, accounting software used for bookkeeping system.
Mistakes that Kill Small Business
Another interesting list I found on bottomlinesecrets.com. As an accountant, I'll try not to be offended by Mistake #3...just kidding...accounting controls are the key.
Bottom Line's Business Secrets
Bottom Line's Business Secrets
Dumb Mistakes that Kill Small Businesses And what you can do instead Ruth King BusinessTVChannel.com Published: July 1, 2007 Y ou have a strong work ethic, a solid business plan and a great reputation in your field. Your small business ought to be a success. Yet a single seemingly minor mistake might be all it takes to make a thriving young company go belly up. Fatal small business mistakes often can be avoided, but only by business owners who recognize the danger in time. Common errors that can doom small companies...
Mistake 1: Relying too much on one customer. New businesses sometimes start out with just one or two clients. When these clients provide all the work the business can handle, the customer list doesn’t expand. After all, why search for new clients when the dance card is already full? However, short client lists increase the odds of disaster. Small companies often collapse when a customer that accounts for 50% to 100% of their income decides to use another supplier... eliminate a product line... or handle a previously outsourced function in-house. What to do: Continue to search for additional customers even if one or two big clients already give you all the work your business can handle. If necessary, add an employee. Avoid letting any customer make up more than 25% of your revenue.
Mistake 2: Losing key employees to competitors. A small business might have only a few employees. It can be a crippling blow if one or two of the best quit to join a rival. Not only are the company’s most productive people now working for the other team, but the owner often must do the work that these former employees would have done. On top of that, he/she has to hire and train replacements, all of which can distract him from leading the company. The departed employees even might take some of the company’s best customers with them. Example: Several top-producing employees of a small Nevada mortgage brokerage company were hired away by a new rival that was attempting to enter the sector. The mortgage brokerage owner could not find adequate replacements and was forced to scale back his operations despite surging demand. What to do: To keep your employees loyal, do everything in your power to keep them happy. Remember to praise employees and thank them for their efforts. Keep the attitude of the office upbeat. An enjoyable working environment is at least as important for employee retention as hefty salaries.
Mistake 3: Trusting a bookkeeper too much. Even an honest-seeming bookkeeper could be an embezzler. Example: A Georgia contracting company hired a grandmotherly bookkeeper whom everyone loved -- until they learned that she had cooked the books and forged $100,000 in checks. What to do: Maintain personal control over your company’s money whenever possible. Do not give a bookkeeper check-signing privileges. Have bank statements sent to your home so you see them before your employees do. Each quarter, print out lists of receivables and payables and scan them for unusual entries. Divide any financial tasks that you can’t handle yourself among several employees so no one employee can steal without another noticing a problem.
Mistake 4: Turning a hobby into a business without understanding what’s involved. Coin collectors often dream of owning coin shops... skilled amateur photographers hope to open their own studios. Unfortunately, many people turn their hobbies into small businesses without first considering the time and money required, the risks and their lack of practical business skills. Example: A woman interested in Native American jewelry opened two jewelry stores -- one in Colorado, the other in Arizona. She had a great eye for jewelry, but she had no knowledge of the local markets... didn’t know how to write a business plan... and had never worked in retail. Both shops failed. What to do: Before launching your business, work for someone who has a comparable business so you can learn about the field. (This business either should be a few towns removed from where you intend to start your business or have a slightly different focus so that you won’t later be in direct competition.) Try to master mundane back-office tasks that are unfamiliar to you, such as balancing the books and negotiating with distributors and suppliers. To reduce your risk, try to launch your business part-time before leaving your current job. This means working very hard for a while, but it’s better than taking the leap without a safety net.
Mistake 5: Having a relationship with just one bank. Most small businesses depend on loans and lines of credit to get them off the ground and avoid cash-flow shortfalls. When a business builds a relationship with only one bank, that credit can dry up if the bank’s policies or management change. What to do: Try to do business with at least two local banks so they get to know you and believe in your company.
Mistake 6: Thinking you’ll never get sick. A long-term health problem, even if it is not life-threatening, could mean the demise of your business, particularly if it is a sole proprietorship. Example: A Georgia hairdresser broke his arm in a motorcycle accident and could not cut hair for more than a month. He contracted with another hairdresser to cut his clients’ hair for the time his arm was in a cast. Had his customers gone elsewhere, his business might not have recovered. What to do: Do not work yourself so hard that your health deteriorates. Quit any risky hobbies. Consider signing an agreement with a friendly, respected competitor to look after each other’s businesses in the event of extended health problems. Make sure this agreement includes a promise not to poach customers. If you can afford it, buy disability insurance.
Mistake 7: Failing to share the workload with employees or partners. Some small business owners find it psychologically difficult to give anyone but themselves important assignments. Their unwillingness to accept assistance limits their companies’ growth, and eventually they burn out. What to do: If your current employees can’t handle the work, hire or train employees who can.
Mistake 8: Working with unstable suppliers or distributors. When a small business’s supplier or distributor has problems, the small business itself has problems. Example: A California writer lost her stream of income and her entire inventory of books when her book distributor went bankrupt. What to do: Work with multiple suppliers and distributors whenever possible. Watch for signs of financial problems in these companies, such as bounced checks or slow-to-arrive payments. Ask your lawyer to look over your contracts with distributors to make sure that you will still own your products if the distributor goes bankrupt. For more information about protecting your small business: www.smallbusinessadvocate.com... www.sbresources.com... www.startupnation.com
Powered by ScribeFire.
#10 Difference between Accounting and Auditing ( from Financial Perspective)
Back to a fundamental question, what is the difference between accounting and auditing from a financial perspective?
A quick answer is: Accounting is a process of preparing the works, Auditing is a process of evaluating & scrutinizing of the work prepared.
In other words, accountants are in charged of the day-to-day duties of maintaing the accounts, implementing the board financial strategy, if any. At the end of the period, accountant would produce Financial Statement, a summary report of the financial performance throughout the period. Whereas, auditor conduct a check on the accuracy of the financial statements, to ensure that there is no material misstatement of the financial statement prepared.
A quick answer is: Accounting is a process of preparing the works, Auditing is a process of evaluating & scrutinizing of the work prepared.
In other words, accountants are in charged of the day-to-day duties of maintaing the accounts, implementing the board financial strategy, if any. At the end of the period, accountant would produce Financial Statement, a summary report of the financial performance throughout the period. Whereas, auditor conduct a check on the accuracy of the financial statements, to ensure that there is no material misstatement of the financial statement prepared.
#Joke- The accountant couldn't sleep ( stock take implication)
Kenny, an accountant, who just joined the big 4, was having a hard time sleeping and goes to see his private doctor. "Doctor, I just can't get to sleep at night."
"Have you tried counting sheep?"
"That's the problem - I make a mistake and then spend three hours trying to find it."
( Note: This is a common profession behavior while accountants are doing stock take! Haha!)
"Have you tried counting sheep?"
"That's the problem - I make a mistake and then spend three hours trying to find it."
( Note: This is a common profession behavior while accountants are doing stock take! Haha!)
Privacy Policy
Privacy Policy for http://myauditingaccounting.blogspot.com/
If you require any more information or have any questions about our privacy policy, please feel free to contact us by email at iismazidah@gmail.com.
At http://myauditingaccounting.blogspot.com/, the privacy of our visitors is of extreme importance to us. This privacy policy document outlines the types of personal information is received and collected by http://myauditingaccounting.blogspot.com/ and how it is used.
Log Files
Like many other Web sites, http://myauditingaccounting.blogspot.com/ makes use of log files. The information inside the log files includes internet protocol ( IP ) addresses, type of browser, Internet Service Provider ( ISP ), date/time stamp, referring/exit pages, and number of clicks to analyze trends, administer the site, track user’s movement around the site, and gather demographic information. IP addresses, and other such information are not linked to any information that is personally identifiable.
Cookies and Web Beacons
http://myauditingaccounting.blogspot.com/ does use cookies to store information about visitors preferences, record user-specific information on which pages the user access or visit, customize Web page content based on visitors browser type or other information that the visitor sends via their browser.
DoubleClick DART Cookie
.:: Google, as a third party vendor, uses cookies to serve ads on http://myauditingaccounting.blogspot.com/.
.:: Google's use of the DART cookie enables it to serve ads to users based on their visit to http://myauditingaccounting.blogspot.com/ and other sites on the Internet.
.:: Users may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy at the following URL - http://www.google.com/privacy_ads.html
Some of our advertising partners may use cookies and web beacons on our site. Our advertising partners include ....
Google Adsense
These third-party ad servers or ad networks use technology to the advertisements and links that appear on http://myauditingaccounting.blogspot.com/ send directly to your browsers. They automatically receive your IP address when this occurs. Other technologies ( such as cookies, JavaScript, or Web Beacons ) may also be used by the third-party ad networks to measure the effectiveness of their advertisements and / or to personalize the advertising content that you see.
http://myauditingaccounting.blogspot.com/ has no access to or control over these cookies that are used by third-party advertisers.
You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://myauditingaccounting.blogspot.com/'s privacy policy does not apply to, and we cannot control the activities of, such other advertisers or web sites.
If you wish to disable cookies, you may do so through your individual browser options. More detailed information about cookie management with specific web browsers can be found at the browsers' respective websites.
If you require any more information or have any questions about our privacy policy, please feel free to contact us by email at iismazidah@gmail.com.
At http://myauditingaccounting.blogspot.com/, the privacy of our visitors is of extreme importance to us. This privacy policy document outlines the types of personal information is received and collected by http://myauditingaccounting.blogspot.com/ and how it is used.
Log Files
Like many other Web sites, http://myauditingaccounting.blogspot.com/ makes use of log files. The information inside the log files includes internet protocol ( IP ) addresses, type of browser, Internet Service Provider ( ISP ), date/time stamp, referring/exit pages, and number of clicks to analyze trends, administer the site, track user’s movement around the site, and gather demographic information. IP addresses, and other such information are not linked to any information that is personally identifiable.
Cookies and Web Beacons
http://myauditingaccounting.blogspot.com/ does use cookies to store information about visitors preferences, record user-specific information on which pages the user access or visit, customize Web page content based on visitors browser type or other information that the visitor sends via their browser.
DoubleClick DART Cookie
.:: Google, as a third party vendor, uses cookies to serve ads on http://myauditingaccounting.blogspot.com/.
.:: Google's use of the DART cookie enables it to serve ads to users based on their visit to http://myauditingaccounting.blogspot.com/ and other sites on the Internet.
.:: Users may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy at the following URL - http://www.google.com/privacy_ads.html
Some of our advertising partners may use cookies and web beacons on our site. Our advertising partners include ....
Google Adsense
These third-party ad servers or ad networks use technology to the advertisements and links that appear on http://myauditingaccounting.blogspot.com/ send directly to your browsers. They automatically receive your IP address when this occurs. Other technologies ( such as cookies, JavaScript, or Web Beacons ) may also be used by the third-party ad networks to measure the effectiveness of their advertisements and / or to personalize the advertising content that you see.
http://myauditingaccounting.blogspot.com/ has no access to or control over these cookies that are used by third-party advertisers.
You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://myauditingaccounting.blogspot.com/'s privacy policy does not apply to, and we cannot control the activities of, such other advertisers or web sites.
If you wish to disable cookies, you may do so through your individual browser options. More detailed information about cookie management with specific web browsers can be found at the browsers' respective websites.
#9 Is banker's guarantee a contingent liability?
Companies sometimes have outstanding banker's guarantee such as those given in lieu of deposits, performance guarantees given to customers etc. Such banker's guarantees do not meet the definition of contingent liabilities under FRS 37.
The events that may trigger payment by the banks are within the control of the Company and are not uncertain future events. The Company does not have any present obligation until it defaults on payment of lease or fails to perform the contracts. These banker's guarantees should not be described as contingent liabilities of the Company in the financial statements.
The events that may trigger payment by the banks are within the control of the Company and are not uncertain future events. The Company does not have any present obligation until it defaults on payment of lease or fails to perform the contracts. These banker's guarantees should not be described as contingent liabilities of the Company in the financial statements.
#8 Impact of IAS 39/FRS 39 on Staff Loan & Inter-co Loan
After the implementation of FRS 39, inter-company loans & staff loans borrowed at preferential rates, the fair value of the consideration given would not be the same as the actual amount (cash) given. In fact, the fair value of such loans is the present value (NPV) of all expected future cash receipts discounted at market interest rate ( estimated at the time of disbursement) for a similar loan.
After the discounting process with market interest rate, the present value will be lower than its actual amount given; the difference is not a financial asset unless it qualifies for recognition as an asset under another applicable standard (e.g. FRS 38 Intangible Assets)
After the discounting process with market interest rate, the present value will be lower than its actual amount given; the difference is not a financial asset unless it qualifies for recognition as an asset under another applicable standard (e.g. FRS 38 Intangible Assets)
#7 Risk-based vs Control-based audit approach
The collapse of enron had not only posted auditors' works under the spot light , but also increased the work load of the auditors. Auditors are struggling hard to gain market confidence on their works, follwing the demise of Enron, HIH ...
There are emerging trend that the audit firm starts to move away from risk-based audit approach, and switching towards control-based approach. This has made the works more cumbersome & more tedious.
There are emerging trend that the audit firm starts to move away from risk-based audit approach, and switching towards control-based approach. This has made the works more cumbersome & more tedious.
#6 Unused Tax Losses & Unused Tax Credits (Deferred Tax Assets Implications)
IFRS 12:
“A deferred tax asset should be recognized for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and used tax credits can be utilized”
If a company has unused tax losses carried forward from previous year (years), some of the companies tend not to recognize the deferred tax asset in its balance sheet. As stated in IFRS 12: “… to the extent that it is probable that future taxable profit will be available against which the unused tax losses …can be utilized”. Assuming XYZ co has been making Net Losses for 2 consecutive years, and the current losses position is strong evidence that XYZ co’s businesses are not doing well, and future profitability is in doubt.
In order to “utilize” the unused tax losses carried forward, XYZ co. has to make a profit in next financial year. Unless there are strong reasonable grounds to believe that ‘it is probable that future taxable profit will be available’, such as: entering an agreement with customers for next 12 month orders, the company should not recognize the Deferred Tax Assets, based on ground of prudence.
The second issue involved in recognizing deferred tax assets for unused tax losses and unused tax credits is: the unused tax losses are subject to Inland Revenue Authority of respective countries, and compliance with certain underlying provisions. Due to these reasons, the market tends not to recognize DTA, even if they are likely in a net profit position in next financial year.
However, one could disclosed unutilized tax losses or unutilized tax credits in the form of notes to financial statement, as an information to financial statements users.
“A deferred tax asset should be recognized for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and used tax credits can be utilized”
If a company has unused tax losses carried forward from previous year (years), some of the companies tend not to recognize the deferred tax asset in its balance sheet. As stated in IFRS 12: “… to the extent that it is probable that future taxable profit will be available against which the unused tax losses …can be utilized”. Assuming XYZ co has been making Net Losses for 2 consecutive years, and the current losses position is strong evidence that XYZ co’s businesses are not doing well, and future profitability is in doubt.
In order to “utilize” the unused tax losses carried forward, XYZ co. has to make a profit in next financial year. Unless there are strong reasonable grounds to believe that ‘it is probable that future taxable profit will be available’, such as: entering an agreement with customers for next 12 month orders, the company should not recognize the Deferred Tax Assets, based on ground of prudence.
The second issue involved in recognizing deferred tax assets for unused tax losses and unused tax credits is: the unused tax losses are subject to Inland Revenue Authority of respective countries, and compliance with certain underlying provisions. Due to these reasons, the market tends not to recognize DTA, even if they are likely in a net profit position in next financial year.
However, one could disclosed unutilized tax losses or unutilized tax credits in the form of notes to financial statement, as an information to financial statements users.
#Joke - Tax advisor
John, the tax advisor had just reached home and read the story of Cinderella to his five-year-old daughter for the first time.
The little girl was fascinated by the story, especially the part where the pumpkin turns into a golden coach. Suddenly she piped up, "Daddy, when the pumpkin turned into a golden coach, would that be classed as income or a long-term capital gain?"
The little girl was fascinated by the story, especially the part where the pumpkin turns into a golden coach. Suddenly she piped up, "Daddy, when the pumpkin turned into a golden coach, would that be classed as income or a long-term capital gain?"
#5 Practical Audit Tips- Lesson 1: Cash & Bank
<>
Cash & Bank balance stands as an asset of the company, and is one of the important element of balance sheet. The primary assertions we concerned are: valuation, existence, right & obligations. From the assertions listed, we are more concerned about the overstatement of the asset.
Generally, the audit works involved, including:
1. Analytical Procedure (compared the difference between prior year figure to current year figure)
2. Cash Book Review
3. Obtaining confirmation from respective banks
4. Bank Reconciliation Review
5. Petty Cash count
1. Analytical Procedure
Knowing the fluctuations of the cash balances, one would be able to gauge a general idea of
what had happen during the year. For instance, a purchase of machine would probably incur
a general layout ( assumption: XYZ company paid by cash), a sales of its equity shares, so on
and so forth.
As a starting ground, we would like to know the profit incurred during the year, adjusted for
non-cash items, such as: depreciation. Then, we start to taken in other cash effect
transactions. In short, analytical procedure give you a general idea about what you would
expect during the rest of the course of audit.
2. Cash Book Review
Obtaining a cash book transactions listing ( cash-in and cash-out), to examine the nature of
the transactions. The objective is to ensure that the cash transactions are within the ordinary
course of business.
3. Obtaining bank confirmation
External evidence, in this case, are more reliable than internally-generated sources. Send a
a bank confirmation to the respective banks to confirm the balance.
4. Bank Reconciliation Review
Sometimes, the company might have long outstanding reconciling items, which might
signals the issues of blank cheque. Hence, bank reconciliation review would help you to
be aware of those long reconciling items.
5. Petty Cash count
Restaurants, hotel might maintain a huge amount of petty cash on hand. A petty cash count
is essential to ensure the correctness of the balances.
Cash & Bank balance stands as an asset of the company, and is one of the important element of balance sheet. The primary assertions we concerned are: valuation, existence, right & obligations. From the assertions listed, we are more concerned about the overstatement of the asset.
Generally, the audit works involved, including:
1. Analytical Procedure (compared the difference between prior year figure to current year figure)
2. Cash Book Review
3. Obtaining confirmation from respective banks
4. Bank Reconciliation Review
5. Petty Cash count
1. Analytical Procedure
Knowing the fluctuations of the cash balances, one would be able to gauge a general idea of
what had happen during the year. For instance, a purchase of machine would probably incur
a general layout ( assumption: XYZ company paid by cash), a sales of its equity shares, so on
and so forth.
As a starting ground, we would like to know the profit incurred during the year, adjusted for
non-cash items, such as: depreciation. Then, we start to taken in other cash effect
transactions. In short, analytical procedure give you a general idea about what you would
expect during the rest of the course of audit.
2. Cash Book Review
Obtaining a cash book transactions listing ( cash-in and cash-out), to examine the nature of
the transactions. The objective is to ensure that the cash transactions are within the ordinary
course of business.
3. Obtaining bank confirmation
External evidence, in this case, are more reliable than internally-generated sources. Send a
a bank confirmation to the respective banks to confirm the balance.
4. Bank Reconciliation Review
Sometimes, the company might have long outstanding reconciling items, which might
signals the issues of blank cheque. Hence, bank reconciliation review would help you to
be aware of those long reconciling items.
5. Petty Cash count
Restaurants, hotel might maintain a huge amount of petty cash on hand. A petty cash count
is essential to ensure the correctness of the balances.
#4 Economist comments on Sarbanes-Oxley Act
Found an article related to the Sarbanex- Oxley Act (sox), which could trigger our thinking about the time & resources we spent on implementing a desired procedures
Was is Worth it?
The Economist wonders whether the benefits of Sarbanes-Oxley exceed its costs.
Was is Worth it?
The Economist wonders whether the benefits of Sarbanes-Oxley exceed its costs.
Alan Greenspan, chairman of the Federal Reserve, spoke up in defence of the statute this week. It was faint praise. He said he was surprised that a law which had been passed so rapidly had worked as well as it has less of an endorsement than it first seemed, since laws dealing with issues as complex as these and passed as rapidly as was Sarbanes-Oxley can normally be expected to fail abjectly.
#3 What is big 4
Big 4 is a short abbreviation for 4 of the audit companies who are dominating the supply of auditing services worldwide. Big 4, namely Price Waterhouse Coopers, Ernst & Young, Deloitte and KPMG have their offices across the different regions in the world.
The services provided by Big 4 could be categorized into three main areas: advisory, taxation & audit. There would be different sub-categories within each area. For instance, there are financial service audit, commercial audit (including audit across different industry, e.g. manufacturing), small to medium enterprise audit, US GAAP audit, and others. Each specialization would have a target group (by industry, by region, by accounting standard).
Recruitment processes in Big 4 are considered competitive and selective. Since their main focus are corporate client, including the big conglomerate group, they prefer high fliers in the University.
The services provided by Big 4 could be categorized into three main areas: advisory, taxation & audit. There would be different sub-categories within each area. For instance, there are financial service audit, commercial audit (including audit across different industry, e.g. manufacturing), small to medium enterprise audit, US GAAP audit, and others. Each specialization would have a target group (by industry, by region, by accounting standard).
Recruitment processes in Big 4 are considered competitive and selective. Since their main focus are corporate client, including the big conglomerate group, they prefer high fliers in the University.
#2 Accounting Treatment for Bad Debt Recovered
Assuming a manufacturer, XYZ Ltd who has a number of regular customers ( debtors), who purchased on credit term. However, one of the customer, said ABC Co. has long outstanding debt due to XYZ Ltd. The outstanding position is significantly longer than industry average. Hence, the XYZ Ltd would make a provision of doubtful debt for the amount due for the outstanding debt due from ABC Co.:
Dr. Bad Debt Expense XXX
Cr. Provision for Doubtful Debt XXX
Due to unexpected cash in-flow to ABC Co, and ABC Co. pay off the debt due to XYZ Ltd; hence, in XYZ accounting book, they would reverse the provision made:
Dr. Provision for Doubtful Debt XXX
Cr. Bad Debt Recovered (P&L) XXX
Dr. Bad Debt Expense XXX
Cr. Provision for Doubtful Debt XXX
Due to unexpected cash in-flow to ABC Co, and ABC Co. pay off the debt due to XYZ Ltd; hence, in XYZ accounting book, they would reverse the provision made:
Dr. Provision for Doubtful Debt XXX
Cr. Bad Debt Recovered (P&L) XXX
#1 Introduction to "Auditing & Accounting Blog"
This blog is dedicated to describe normal accounting & auditing practices in place on:
1. accounting treatments of certain issues (e.g. prepayment)
2. common audit issues
3. any other accounting & auditing related topics.
4. auditing & accounting career
1. accounting treatments of certain issues (e.g. prepayment)
2. common audit issues
3. any other accounting & auditing related topics.
4. auditing & accounting career
Subscribe to:
Posts (Atom)