There is a very close relationship between accounting standards and auditing standards

April 23rd, 2022 § 0 comments § permalink

2. Legal proceedings At the year-end, the company had made disclosure of a contingent liability. However, subsequent to the year-end (), the court found the company liable for breach of contract. The legal proceedings were issued on (some 10 days before the year-end). This is, therefore, evidence of conditions that existed at the year-end. IAS 10 requires the result of a court case after the reporting date to be taken into consideration to determine whether a provision should be recognised in accordance with IAS 37, Provisions, Contingent Liabilities and Contingent Assets at the year-end. In this case, the financial statements will require adjusting because:

  • the conditions existed at the year-end
  • the recognition criteria for a provision in accordance with IAS 37 have been met.

3. Loss of customer A customer ceasing to trade so soon after the reporting period indicates non-recoverability of a receivable at the reporting date and therefore represents an adjusting event under IAS 10, Events After the Reporting Period. Assets should not be carried in the statement of financial position at any more than their recoverable amount and, therefore, an allowance for receivables should be made. » Read the rest of this entry «

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