IAS 11 Construction Contracts

<div dir="ltr" style="text-align: left;" trbidi="on"> <h2 style="text-align: center;"> <span style="color: #cc0000; font-family: 'Helvetica Neue', Arial, Helvetica, sans-serif;">IAS 11 Construction Contracts Notes</span></h2> <br /> <iframe height="480" src="https://docs.google.com/file/d/0B1CqQ-E4dZ0wM1Q4d3c0VGduSEE/preview" width="640"></iframe><br /> <div class="separator" style="clear: both; text-align: center;"> <a href="https://drive.google.com/open?id=0B1CqQ-E4dZ0wM1Q4d3c0VGduSEE&authuser=0" rel="nofollow" target="_blank"><img border="0" height="57" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgNWjBF_aYGXHcqBpSt3cArKmKwNhB0RcK_Wb9LFUf7Kq0BHT-YaldadX73HPExSqIGPZVmXwn63DjPCYNWLeG8Xlr8WuQbNhUdkNX2C5vRTOsAj3vppg-Sua1msLbJD7zzqhmyHLb6V5_Y/s200/button-download-animated.gif" width="200" /></a></div> <div class="MsoNormal" style="background-position: initial initial; background-repeat: initial initial; text-align: justify;"> <b><span style="background-color: white; color: white; font-size: 12pt; line-height: 115%;"><br /></span></b></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-font-size: 11.0pt; mso-bidi-theme-font: minor-latin; mso-themecolor: background1;">Definitions<o:p></o:p></span></b></div> <div class="MsoNormal" style="text-align: justify;"> A construction contract is a contract specifically negotiated for the construction of an asset, (or combination of assets), that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <b>A Fixed Price Contract </b>is a construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which in some cases is subject to cost escalation clauses.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <b>A Cost plus Contract </b>is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraph" style="margin-left: .75in; mso-add-space: auto; mso-list: l8 level1 lfo7; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Contract Revenue<o:p></o:p></b></div> <div class="MsoNormal" style="margin-left: .5in; text-align: justify; text-indent: .25in;"> Comprises <b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l0 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->the initial amount agreed in the contract, plus revenue from variations in the original work, plus claims and incentive payments that:<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 2.25in; mso-add-space: auto; mso-list: l9 level3 lfo1; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->It is probable that they will result in revenue <o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 2.25in; mso-add-space: auto; mso-list: l9 level3 lfo1; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Can be measured reliably.<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l0 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->measure revenue at the fair value of the consideration received or receivable.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraph" style="margin-left: .75in; mso-add-space: auto; mso-list: l8 level1 lfo7; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Contract Costs<o:p></o:p></b></div> <div class="MsoNormal" style="margin-left: .25in; text-align: justify; text-indent: .5in;"> Comprises:<o:p></o:p></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Costs directly related to the specific contract<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Costs attributable to general contract activity that can be allocated to the contract<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo2; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Such other costs that are specifically chargeable to the customer under the contract terms <o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l2 level2 lfo2; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Refer to paragraphs 17-21 for included and excluded costs.<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-size: 12.0pt; line-height: 115%; mso-bidi-font-size: 11.0pt; mso-themecolor: background1;">Accounting<o:p></o:p></span></b></div> <div class="MsoListParagraph" style="margin-left: .75in; mso-add-space: auto; mso-list: l3 level1 lfo9; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Contract Revenue<o:p></o:p></b></div> <div class="MsoNormal" style="margin-left: .25in; text-align: justify; text-indent: .5in;"> Two or more contracts (same or different customers) should be accounted for as a single contract, if: <o:p></o:p></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l1 level1 lfo3; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -1.25in;"> <!--[if !supportLists]--><span style="font-family: 'Times New Roman'; font-size: 7pt;">                                             </span>i.<span style="font-family: 'Times New Roman'; font-size: 7pt;">            </span><!--[endif]-->Negotiated together, <o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l1 level1 lfo3; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -1.25in;"> <!--[if !supportLists]--><span style="font-family: 'Times New Roman'; font-size: 7pt;">                                           </span>ii.<span style="font-family: 'Times New Roman'; font-size: 7pt;">            </span><!--[endif]-->work is interrelated, and<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l1 level1 lfo3; mso-text-indent-alt: -.25in; text-align: justify; text-indent: -1.25in;"> <!--[if !supportLists]--><span style="font-family: 'Times New Roman'; font-size: 7pt;">                                          </span>iii.<span style="font-family: 'Times New Roman'; font-size: 7pt;">            </span><!--[endif]-->Performed concurrently.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l3 level1 lfo9; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Separating Contracts<o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l4 level1 lfo10; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If the contract covers multiple assets, the assets should be accounted for separately if:<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l5 level3 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Separate proposals were submitted for each asset;<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l5 level3 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->The contract for each asset were negotiated separately; and<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l5 level3 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->The costs and revenues of each asset can be identified.<o:p></o:p></div> <div class="MsoNormal" style="margin-left: .5in; text-align: justify; text-indent: .5in;"> Otherwise the contract should be accounted for in its entirety.<o:p></o:p></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l5 level2 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If the contract provides an option to the customer to order additional assets, the additional assets can be accounted for separately if:<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l5 level3 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->The additional asset differs significantly from the original asset; and<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l5 level3 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->The price of the additional asset is negotiated separately.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184; width: 667px;"> <tbody> <tr> <td colspan="2" style="background: #C00000; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 6.95in;" valign="top" width="667"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;"> <b><span style="color: white; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-themecolor: background1;">Estimation Of Outcome</span></b><span style="color: white; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-themecolor: background1;"><o:p></o:p></span></div> </td> </tr> <tr> <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 4.45in;" valign="top" width="427"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;"> <b>Can be estimated reliably<o:p></o:p></b></div> <div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0.0001pt 0.75in; text-align: justify; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If the entity can make an assessment of the revenue, the stage of completion and the costs to complete the contract<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0.0001pt 0.75in; text-align: justify; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If the outcome can be measured reliably - revenue and costs on the contract should be measured with reference to <b>stage of completion basis</b>. Under this basis, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0.0001pt 0.75in; text-align: justify; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->When it is probable that the total contract costs will exceed contract revenue, the expected loss is recognized as an expense immediately.<o:p></o:p></div> </td> <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 2.5in;" valign="top" width="240"><div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;"> <b>Cannot be estimated reliably<o:p></o:p></b></div> <div class="MsoListParagraphCxSpFirst" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->No profit recognized<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Revenue recognized only to the extent costs are recoverable<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Costs are recognized as an expense when incurred<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-bottom: 0.0001pt; text-align: justify; text-indent: -0.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Expected losses are required to be recognized as an expense as soon as a loss is probable<o:p></o:p></div> </td> </tr> </tbody></table> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="text-align: justify;"> <b>Disclosure<o:p></o:p></b></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l7 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->The amount of contract revenue recognized as revenue in the period<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l7 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Methods used to determine the contract revenue recognized in the period<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l7 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->The methods used to determine the stage of completion of contracts in progress<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l7 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->The gross amount due from customers for contract work as an asset (WIP that has not been expensed)<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l7 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->The gross amount due to customers for contract work as a liability (prepayment from customers)<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l7 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->An entity is required disclose each of the following for contracts in progress at the end of the reporting period:<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l7 level2 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->The aggregate amount of costs and profits (less recognized losses) to date<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l7 level2 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->The amount of advances received<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; mso-add-space: auto; mso-list: l7 level2 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->The amount of retentions.<o:p></o:p></div> <div class="separator" style="clear: both; text-align: center;"> <a href="https://drive.google.com/open?id=0B1CqQ-E4dZ0wM1Q4d3c0VGduSEE&authuser=0" rel="nofollow" target="_blank"><img border="0" height="34" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvMFX27UgIR9IhymT5JJUHMtJYExREgqHup7nu8l4XudjoC0E_I53yKWZZl4fXT3ZIgZ12Mtq-NHttjmxCdfX1oaP-BI2DCtlcYC80yD-Lw7oasetq7OI7F0OT7xLCKCp2Nu-zBaWRkmfF/s200/read_icon.gif" width="200" /></a></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; text-align: center; text-indent: -0.25in;"> <br /> <h2 style="font-family: ''; text-align: center; text-indent: 0px;"> <span style="color: #cc0000; font-family: Helvetica Neue, Arial, Helvetica, sans-serif;">IAS 11 Construction Contracts Notes</span></h2> </div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.5in; text-align: center; text-indent: -0.25in;"> <h2> <span style="color: #cc0000; font-family: Helvetica Neue, Arial, Helvetica, sans-serif; font-size: small; font-weight: normal;">CA Accounting Notes, ACCA Accounting Notes</span></h2> </div> </div>

IAS 11 Construction Contracts

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IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

<div dir="ltr" style="text-align: left;" trbidi="on"> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <iframe height="480" src="https://docs.google.com/file/d/0B1CqQ-E4dZ0wbVV6YTBmWU9sMW8/preview" width="640"></iframe> <div class="MsoNormal" style="text-align: center;"> <b><span style="font-size: 12pt; line-height: 115%;"><span style="color: #990000;"> <a href="https://drive.google.com/open?id=0B1CqQ-E4dZ0wbVV6YTBmWU9sMW8&authuser=0" rel="nofollow" target="_blank"><span style="color: #990000;">Click Here to Download Pdf</span></a></span></span></b></div> <div class="MsoNormal" style="text-align: justify;"> <b><span style="font-size: 12pt; line-height: 115%;"><br /></span></b></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-font-size: 11.0pt; mso-bidi-theme-font: minor-latin; mso-themecolor: background1;">Accounting Policies<o:p></o:p></span></b></div> <div class="MsoNormal" style="text-align: justify;"> <b>Definition<o:p></o:p></b></div> <div class="MsoNormal" style="text-align: justify;"> Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l8 level1 lfo10; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Selection and Application of Accounting Policies<o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l6 level1 lfo13; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If a standard or interpretation deals with a transaction, use that standard or interpretation</div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l6 level1 lfo13; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If no standard or interpretation deals with a transaction, judgment should be applied. The following sources should be referred to, to make the judgment:</div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 2.0in; mso-add-space: auto; mso-list: l0 level4 lfo1; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Requirements and guidance in other standards/interpretations dealing with similar issues<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 2.0in; mso-add-space: auto; mso-list: l0 level4 lfo1; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Definitions, recognition criteria in the framework<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 2.0in; mso-add-space: auto; mso-list: l0 level4 lfo1; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->May use other GAAP that use a similar conceptual framework and/or may consult other industry practice / accounting literature that is not in conflict with standards / interpretations.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraph" style="margin-left: .75in; mso-add-space: auto; mso-list: l8 level1 lfo10; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Consistency of Accounting Policies<o:p></o:p></b></div> <div class="MsoNormal" style="margin-left: .5in; text-align: justify; text-indent: .25in;"> Policies should be consistent for similar transactions, events or conditions.<o:p></o:p></div> <div class="MsoNormal" style="margin-left: .5in; text-align: justify; text-indent: .25in;"> <b>Only change a policy if:<o:p></o:p></b></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l10 level1 lfo2; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Standard/interpretation requires it, or<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l10 level1 lfo2; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Change will provide more relevant and reliable information<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraph" style="margin-left: .75in; mso-add-space: auto; mso-list: l8 level1 lfo10; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>3.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Principle of Change<o:p></o:p></b></div> <div class="MsoNormal" style="margin-left: .75in; text-align: justify;"> If change is due to new standard / interpretation, apply transitional provisions. If no transitional provisions, apply retrospectively<span style="color: #000081;">.<o:p></o:p></span></div> <div class="MsoNormal" style="margin-left: .75in; text-align: justify;"> If impractical to determine period-specific effects or cumulative effects of the error, then retrospectively apply to the earliest period that is practicable.<o:p></o:p></div> <div class="MsoNormal" style="margin-left: .75in; text-align: justify;"> <br /></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l8 level1 lfo10; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>4.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Disclosure<o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->The title of the standard / interpretation that caused the change<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Nature of the change in policy<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Description of the transitional provisions<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->For the current period and each prior period presented, the amount of the adjustment to:<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l2 level2 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-bidi-font-weight: bold; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Each line item affected<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l2 level2 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-bidi-font-weight: bold; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Earnings per share.<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Amount of the adjustment relating to prior periods not presented<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If retrospective application is impracticable, explain and describe how the change in policy was applied<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l2 level1 lfo3; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Subsequent periods need not repeat these disclosures.<b><o:p></o:p></b></div> <div class="MsoNormal" style="margin-left: .25in; text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-font-size: 11.0pt; mso-bidi-theme-font: minor-latin; mso-themecolor: background1;">Changes in Accounting Estimates<o:p></o:p></span></b></div> <div class="MsoNormal" style="text-align: justify;"> <b>Definition<o:p></o:p></b></div> <div class="MsoNormal" style="text-align: justify;"> A change in an accounting estimate is an adjustment of the carrying amount of an asset or liability, or related expense, resulting from reassessing the expected future benefits and obligations associated with the asset or liability<span style="color: #000081;">.</span><o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraph" style="margin-left: .75in; mso-add-space: auto; mso-list: l7 level1 lfo11; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Principle of Change<o:p></o:p></b></div> <div class="MsoNormal" style="margin-left: .25in; text-align: justify; text-indent: .5in;"> Recognize the change prospectively in profit or loss in:<o:p></o:p></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l9 level1 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Period of change, if it only affects that period; or<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l9 level1 lfo4; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Period of change and future periods (if applicable).<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l7 level1 lfo11; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Disclosure<o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l11 level1 lfo5; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Nature and amount of change that has an effect in the current period (or expected to have in future)<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l11 level1 lfo5; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Fact that the effect of future periods is not disclosed because of impracticality<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l11 level1 lfo5; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Subsequent periods need not repeat these disclosures.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-font-size: 11.0pt; mso-bidi-theme-font: minor-latin; mso-themecolor: background1;">Errors<o:p></o:p></span></b></div> <div class="MsoNormal" style="text-align: justify;"> <b>Definition<o:p></o:p></b></div> <div class="MsoNormal" style="text-align: justify;"> Prior period errors are omissions from, and misstatements in, an entity’s financial statements for one or more prior periods arising from failure to use/misuse of reliable information that:<o:p></o:p></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l1 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Was available when the financial statements for that period were issued<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l1 level1 lfo6; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Could have been reasonably expected to be taken into account in those financial statements.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> Errors include:<o:p></o:p></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l4 level1 lfo7; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Mathematical mistakes<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l4 level1 lfo7; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Mistakes in applying accounting policies<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l4 level1 lfo7; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Oversights and misinterpretation of facts<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.0in; mso-add-space: auto; mso-list: l4 level1 lfo7; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Fraud.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l12 level1 lfo12; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>1.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Principle of Change<o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l3 level1 lfo9; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Correct all errors retrospectively<b><o:p></o:p></b></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l5 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Restate the comparative amounts for prior periods in which error occurred or if the error occurred before that date – restate opening balance of assets, liabilities and equity for earliest period presented.<o:p></o:p></div> <div class="MsoNormal" style="margin-left: .5in; text-align: justify;"> If impractical to determine period-specific effects of the error (or cumulative effects of the error), restate opening balances (restate comparative information) for earliest period practicable.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l12 level1 lfo12; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><b>2.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal;">       </span></b><!--[endif]--><b>Disclosure<o:p></o:p></b></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l5 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Nature of the prior period error<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l5 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->For each prior period presented, if practicable, disclose the correction to:<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l5 level2 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Each line item affected<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.75in; mso-add-space: auto; mso-list: l5 level2 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">   </span></span><!--[endif]-->Earnings per share (EPS).<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l5 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Amount of the correction at the beginning of earliest period presented<o:p></o:p></div> <div class="MsoListParagraphCxSpMiddle" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l5 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->If retrospective application is impracticable, explain and describe how the error was corrected<o:p></o:p></div> <div class="MsoListParagraphCxSpLast" style="margin-left: 1.25in; mso-add-space: auto; mso-list: l5 level1 lfo8; text-align: justify; text-indent: -.25in;"> <!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">         </span></span><!--[endif]-->Subsequent periods need not to repeat these disclosures.<o:p></o:p></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="text-align: center;"> <o:p> </o:p><b style="font-family: ''; text-align: center;"><span style="font-size: 12pt; line-height: 17.77777862548828px;"><span style="color: #990000;"><a href="https://drive.google.com/open?id=0B1CqQ-E4dZ0wbVV6YTBmWU9sMW8&authuser=0" rel="nofollow" target="_blank"><span style="color: #990000;">Click Here to Download Pdf</span></a></span></span></b></div> </div>

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

  Click Here to Download Pdf Accounting Policies Definition Accounting policies are the specific principles, bases, convention...

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Professional Skepticism, Professional Judgement and Applicable Financial Reporting Framework

<div dir="ltr" style="text-align: left;" trbidi="on"> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Professional Skepticism<o:p></o:p></span></b></div> <h2 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Professional Skepticism</span></b></h2> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">An attitude that includes <u>a questioning mind</u>, <u>being alert to conditions which may indicate possible misstatement,</u> and <u>a critical assessment of audit evidence</u>.</span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Professional skepticism includes being alert to, for example:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Audit evidence that contradicts other audit evidence obtained.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Information that brings into question the reliability of documents and responses to                       inquiries.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Conditions that may indicate possible fraud.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">Circumstances that suggest the need for additional audit procedures. </span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Professional Judgement<o:p></o:p></span></b></div> <h2 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Professional Judgement</span></b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"> </span></h2> <h3 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The application of relevant training, knowledge and experience (within the context provided by auditing, accounting and ethical standard) in making informed decisions about the courses of action that are appropriate in the circumstances of the audit engagement.</span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Professional judgement is essential to the proper conduct of an audit. Professional judgement is necessary in particular regarding decisions about:</span></span></h3> <h3 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Materiality and audit risk.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The nature, timing and extent of audit procedures.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Evaluating whether sufficient appropriate audit evidence has been obtained.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The evaluation of management’s judgements in applying the entity’s applicable financial         reporting framework.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">The drawing of conclusions based on the audit evidence obtained.</span><o:p></o:p></span></h3> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 5.4pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;"> <tbody> <tr> <td style="border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 7.25in;" valign="top" width="696"><h4> <i><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt;">Professional Skepticism and Professional Judgement is applied throughout the audit i.e. Planning Stage, During the Audit and Conclusion Stage. </span></i></h4> </td> </tr> </tbody></table> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-bidi-font-style: italic; mso-themecolor: background1;">Applicable Financial Reporting Framework</span></b><b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;"><o:p></o:p></span></b></div> <h2 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Applicable Financial Reporting Framework</span></b></h2> <h3 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">The financial reporting framework adopted by management in the preparation of the financial statements that is acceptable in view of the <u>nature of the entity</u> and the <u>objective of the financial statements</u>, or that is <u>required by law or regulation</u></span></h3> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Acceptable Financial Reporting Framework<o:p></o:p></span></b></div> <h2 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Acceptable financial reporting frameworks</span></b></h2> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">It normally exhibit the following attributes:</span></h4> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">a.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal; line-height: normal;">    </span></span></b><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Relevance<o:p></o:p></span></b></h3> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">The information provided in the financial statements is relevant to the nature of the entity and the purpose of the financial statements.</span></h4> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">b.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal; line-height: normal;">    </span></span></b><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Completeness<o:p></o:p></span></b></h3> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">Transactions and events, account balances and disclosures that could affect conclusions based on the financial statements are not omitted.</span></h4> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">c.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal; line-height: normal;">    </span></span></b><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Reliability<o:p></o:p></span></b></h3> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The information provided in the financial statements:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">       ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Reflects the economic substance of events and transactions and not merely their                         legal form; and<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">       ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">Results in reasonably consistent evaluation, measurement, presentation and                               disclosure.</span><o:p></o:p></span></h4> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">d.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal; line-height: normal;">    </span></span></b><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Neutrality<o:p></o:p></span></b></h3> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">It contributes to information in the financial statements that is free from bias.</span></h4> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">e.<span style="font-family: 'Times New Roman'; font-size: 7pt; font-weight: normal; line-height: normal;">    </span></span></b><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Understandability<o:p></o:p></span></b></h3> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">The information in the financial statements is clear and comprehensive.</span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <a href="http://auditofaccounts.blogspot.com/search/label/Auditing" rel="nofollow" target="_blank"><img border="0" height="34" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvMFX27UgIR9IhymT5JJUHMtJYExREgqHup7nu8l4XudjoC0E_I53yKWZZl4fXT3ZIgZ12Mtq-NHttjmxCdfX1oaP-BI2DCtlcYC80yD-Lw7oasetq7OI7F0OT7xLCKCp2Nu-zBaWRkmfF/s200/read_icon.gif" width="200" /></a></div> <div class="MsoNormal" style="text-align: justify;"> <b><span style="color: #c00000; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt;"><br /></span></b></div> <h2 style="text-align: center;"> <b><span style="font-family: Arial, sans-serif; font-size: 14pt; line-height: 115%;"><a href="http://auditofaccounts.blogspot.com/search/label/Auditing" rel="nofollow" target="_blank"><span style="color: #cc0000;">Click Here for More Auditing Notes of CA/ACCA</span></a></span></b></h2> <div class="MsoNormal" style="text-align: justify;"> <br /></div> </div>

Professional Skepticism, Professional Judgement and Applicable Financial Reporting Framework

Professional Skepticism Professional Skepticism An attitude that includes a questioning mind , being alert to conditions which may ind...

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Introduction of IFAC, Management’s Responsibility and Auditor’s Responsibility

<div dir="ltr" style="text-align: left;" trbidi="on"> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">International Federation of Accountants<o:p></o:p></span></b></div> <h2 style="text-align: left;"> <b><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">International Federation of Accountants (IFAC)</span></b></h2> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">It is the global organization for the accountancy profession. It is dedicated in serving the public interests by strengthening the profession. IFAC has 167 members and associates in 127 countries around the world representing approximately 2.5 million accountants in public practice, education, government service, industry and commerce.</span></h4> <h3 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">ICAP is a member of IFAC.</span></h3> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">IFAC includes four boards.</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The International Auditing and Assurance Standards Board (IAASB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The International Accounting Education Standards Board (IAESB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The International Ethics Standards Board for Accountants (IESBA)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">The International Public Sector Accounting Standards Board (IPSASB)</span><o:p></o:p></span></h4> <div class="MsoNormal" style="margin-left: .25in; text-align: justify;"> <br /></div> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Auditing and Assurance Standards Board (IAASB)</span></b></h3> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">1.</span><span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"><span style="font-weight: normal;"> </span>   </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">It develops international standards. e.g.</span><b><o:p></o:p></b></span></h4> <h4 style="text-align: left;"> <span style="font-family: Symbol; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">          ·</span><span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"><span style="font-weight: normal;"> </span>       <span style="font-weight: normal;"> </span></span></span><!--[endif]--><span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Auditing (ISAs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards in Assurance Engagements (ISAEs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Review Engagements (ISREs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Related Services (ISRSs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">          ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">International Standards on Quality Control (ISQC) </span><o:p></o:p></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">It issues Practice Statements to guide auditors in implementing international standards            and promoting good audit practices in general.</span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Process of Producing a New ISA</span></b></h3> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The process of producing an ISA is as follows:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">A subject is selected for detailed study, with a view to eventually issuing an ISA.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">After a period of study and research, if there is agreement to proceed, an exposure draft        is produced. The exposure draft is approved by the IAASB and then distributed widely            amongst the profession and others for comment.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Comments and proposed amendments are considered by the IAASB. The draft standard        is then modified and approved by the IAASB.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">The new ISA is then published.</span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility of Management and Those Charged With Governance<o:p></o:p></span></b></div> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">With respect to the audit it is management and TCWG who are responsible:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For prevention and detection of fraud<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For the preparation of the financial statements;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For designing and implementing internal controls; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">To provide the auditor with:<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">            a.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Unrestricted access to persons within the entity to obtain evidence;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">            b.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Access to all information relevant to the preparation of the financial statements of                    which management is aware; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">            c.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Additional information that the auditor may request from management for the                          purpose of the audit.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">To provide written representation to the auditor at the end of the audit.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"> </span></span></h4> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility Of Auditor<o:p></o:p></span></b></div> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Auditor’s responsibility is to:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Obtain reasonable assurance whether financial statements are free from material                    misstatements; and<br /> <o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">Express an opinion on whether financial statements are prepared, in material respects, in      accordance with applicable financial reporting framework.</span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Expectation Gap<o:p></o:p></span></b></div> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">Expectation gap refers to the fact that the public perception of the role and responsibilities of the external auditor is different from his statutory role and responsibilities. For example</span></h4> <table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 5.4pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;"> <tbody> <tr> <td style="background: #C00000; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" width="349"> <div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Public Perception<o:p></o:p></span></b></div> </td> <td style="background: #C00000; border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" width="356"> <div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Reality<o:p></o:p></span></b></div> </td> </tr> <tr> <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"> <h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial statements are prepared by the auditor.</span></h4> </td> <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"> <h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial statements are prepared by the management.</span></h4> </td> </tr> <tr> <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"> <h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor has a duty to prevent and detect fraud.</span></h4> </td> <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"> <h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Management is responsible to prevent and detect fraud.</span></h4> </td> </tr> <tr> <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"> <h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor tests 100% items.</span></h4> </td> <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"> <h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor tests only a sample of items.</span></h4> </td> </tr> </tbody></table> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">The expectation of the public are often set at a level higher than that at which the external auditor actually operates.</span></h4> <div class="MsoNormal"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <a href="http://auditofaccounts.blogspot.com/search/label/Auditing" rel="nofollow" target="_blank"><img border="0" height="34" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvMFX27UgIR9IhymT5JJUHMtJYExREgqHup7nu8l4XudjoC0E_I53yKWZZl4fXT3ZIgZ12Mtq-NHttjmxCdfX1oaP-BI2DCtlcYC80yD-Lw7oasetq7OI7F0OT7xLCKCp2Nu-zBaWRkmfF/s200/read_icon.gif" width="200" /></a></div> <div class="MsoNormal"> <span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div> <h2 style="text-align: center;"> <b><span style="font-family: Arial, sans-serif; font-size: 14pt; line-height: 115%;"><a href="http://auditofaccounts.blogspot.com/search/label/Auditing" rel="nofollow" target="_blank"><span style="color: #cc0000;">Click Here for MoreAuditing Notes of CA/ACCA</span></a></span></b></h2> <div class="MsoNormal"> <br /></div> </div>

Introduction of IFAC, Management’s Responsibility and Auditor’s Responsibility

International Federation of Accountants International Federation of Accountants (IFAC) It is the global organization for the accountan...

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Introduction of Audit, Assurance, Assurance Engagement and Audit Report

<div dir="ltr" style="text-align: left;" trbidi="on"> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">International Federation of Accountants<o:p></o:p></span></b></div> <h2> <b><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">International Federation of Accountants (IFAC)</span></b><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"> </span></h2> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">It is the global organization for the accountancy profession. It is dedicated in serving the public interests by strengthening the profession. IFAC has 167 members and associates in 127 countries around the world representing approximately 2.5 million accountants in public practice, education, government service, industry and commerce.</span></h4> <h3 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">ICAP is a member of IFAC.</span></h3> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">IFAC includes four boards.</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The International Auditing and Assurance Standards Board (IAASB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The International Accounting Education Standards Board (IAESB)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">The International Ethics Standards Board for Accountants (IESBA)<br /><o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;"><span style="font-weight: normal;">The International Public Sector Accounting Standards Board (IPSASB)</span><o:p></o:p></span></h4> <div class="MsoNormal" style="margin-left: .25in; text-align: justify;"> <br /></div> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Auditing and Assurance Standards Board (IAASB)</span></b></h3> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">It develops international standards. e.g.<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12pt; line-height: 115%;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Auditing (ISAs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards in Assurance Engagements (ISAEs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Review Engagements (ISREs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Related Services (ISRSs)<br /><o:p></o:p></span><span style="font-family: Symbol; font-size: 12.0pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">           ·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">         </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">International Standards on Quality Control (ISQC)<br /> <o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 115%;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">It issues Practice Statements to guide auditors in implementing international standards            and promoting good audit practices in general.</span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <h3 style="text-align: left;"> <b><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Process of Producing a New ISA</span></b></h3> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">The process of producing an ISA is as follows:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">A subject is selected for detailed study, with a view to eventually issuing an ISA.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">After a period of study and research, if there is agreement to proceed, an exposure draft        is produced. The exposure draft is approved by the IAASB and then distributed widely            amongst the profession and others for comment.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Comments and proposed amendments are considered by the IAASB. The draft standard        is then modified and approved by the IAASB.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">The new ISA is then published.</span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility of Management and Those Charged With Governance<o:p></o:p></span></b></div> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">With respect to the audit it is management and TCWG who are responsible:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For prevention and detection of fraud<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For the preparation of the financial statements;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">3.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">For designing and implementing internal controls; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">4.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">To provide the auditor with:<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">          a.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Unrestricted access to persons within the entity to obtain evidence;<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">          b.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Access to all information relevant to the preparation of the financial statements of                    which management is aware; and<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">          c.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Additional information that the auditor may request from management for the                          purpose of the audit.<br /><o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">5.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">To provide written representation to the auditor at the end of the audit.</span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Responsibility Of Auditor<o:p></o:p></span></b></div> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Auditor’s responsibility is to:</span></span></h4> <h4 style="text-align: left;"> <span style="font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">1.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;">Obtain reasonable assurance whether financial statements are free from material                    misstatements; and<br /> <o:p></o:p></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-fareast-font-family: Arial;">2.<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">    </span></span><!--[endif]--></span><span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><span style="font-weight: normal;">Express an opinion on whether financial statements are prepared, in material respects, in      accordance with applicable financial reporting framework.</span><o:p></o:p></span></h4> <div class="MsoNormal" style="text-align: justify;"> <br /></div> <div class="MsoNormal" style="background: #C00000; text-align: justify;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; line-height: 115%; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Expectation Gap<o:p></o:p></span></b></div> <h4 style="text-align: left;"> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">Expectation gap refers to the fact that the public perception of the role and responsibilities of the external auditor is different from his statutory role and responsibilities. For example</span></h4> <h4> <table border="1" cellpadding="0" cellspacing="0" class="MsoTableGrid" style="border-collapse: collapse; border: none; margin-left: 5.4pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-padding-alt: 0in 5.4pt 0in 5.4pt; mso-yfti-tbllook: 1184;"> <tbody> <tr> <td style="background: #C00000; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" width="349"><div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Public Perception<o:p></o:p></span></b></div> </td> <td style="background: #C00000; border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-themecolor: text1; mso-border-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" width="356"><div align="center" class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: center;"> <b><span style="color: white; font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-bidi-font-size: 12.0pt; mso-themecolor: background1;">Reality<o:p></o:p></span></b></div> </td> </tr> <tr> <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"><h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial statements are prepared by the auditor.</span></h4> </td> <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"><h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Financial statements are prepared by the management.</span></h4> </td> </tr> <tr> <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"><h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor has a duty to prevent and detect fraud.</span></h4> </td> <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"><h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Management is responsible to prevent and detect fraud.</span></h4> </td> </tr> <tr> <td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 261.65pt;" valign="top" width="349"><h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor tests 100% items.</span></h4> </td> <td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-bottom-themecolor: text1; mso-border-left-alt: solid black .5pt; mso-border-left-themecolor: text1; mso-border-right-themecolor: text1; mso-border-themecolor: text1; mso-border-top-alt: solid black .5pt; mso-border-top-themecolor: text1; padding: 0in 5.4pt 0in 5.4pt; width: 267.1pt;" valign="top" width="356"><h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal;">Auditor tests only a sample of items.</span></h4> </td> </tr> </tbody></table> </h4> <h4> <span style="font-family: Arial, sans-serif; font-size: 12pt; font-weight: normal; line-height: 115%;">The expectation of the public are often set at a level higher than that at which the external auditor actually operates.</span></h4> <div class="MsoNormal"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <a href="http://auditofaccounts.blogspot.com/search/label/Auditing" rel="nofollow" target="_blank"><img border="0" height="34" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvMFX27UgIR9IhymT5JJUHMtJYExREgqHup7nu8l4XudjoC0E_I53yKWZZl4fXT3ZIgZ12Mtq-NHttjmxCdfX1oaP-BI2DCtlcYC80yD-Lw7oasetq7OI7F0OT7xLCKCp2Nu-zBaWRkmfF/s200/read_icon.gif" width="200" /></a></div> <div class="MsoNormal"> <span style="font-family: "Arial","sans-serif"; font-size: 12.0pt; line-height: 115%;"><br /></span></div> <h2 style="text-align: center;"> <b><span style="font-family: Arial, sans-serif; font-size: 14pt; line-height: 115%;"><a href="http://auditofaccounts.blogspot.com/search/label/Auditing" rel="nofollow" target="_blank"><span style="color: #cc0000;">Click Here for MoreAuditing Notes of CA/ACCA</span></a></span></b></h2> <div class="MsoNormal"> <br /></div> </div>

Introduction of Audit, Assurance, Assurance Engagement and Audit Report

International Federation of Accountants International Federation of Accountants (IFAC)   It is the global organization for the account...

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