Immersing in audit

  Unlike IAS 11 IFRS 15 prescribes treating construction contracts the same way as any other contract with customers. The following are issues that were not covered in IAS 11, but are introduced in IFRS   15 : A ) IFRS 15 sets up the 5-steps model for revenue recognition: Identify contract with the customer. Identify the performance obligations in the contract. Determine the transaction price. Allocate the transaction price to the performance obligations in the contract. Recognize revenue when (or as) an entity satisfies a performance obligation. B) Revenue should be recognized when (or as) the entity satisfies a performance obligation by transferring a promised good or service (ie an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. C) If an entity performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, the en

  Key audit matters are those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period. Key audit matters are selected from matters communicated with those charged with governance. The purpose of communicating key audit matters is to enhance the value of the auditor’s report by providing greater transparency about the audit that was performed. The auditor shall determine, from the matters communicated with those charged with governance, those matters that required significant auditor attention in performing the audit. Matters which the auditor may determine to be KAMs include: · Areas of higher risk of material misstatement, or ‘significant risks’ identified at the planning stage. · Significant judgements in relation to areas where management made judgement. · The effect of significant events or transactions. Key audit matters are described in a separate section of the auditor’s report under the head

  The International auditing and assurance standards board designed “The International Standard on Auditing for Audits of Financial Statements of Less Complex Entities” which is effective for audits of financial statements of less complex entities for periods Beginning on or after December 15, 2025. The standard is based on the International Standards on Auditing (ISA) and would follow a simplified approach based on risk assessment. The standard will enable auditors to obtain reasonable assurance that financial statements are free from material misstatements, and in an independent audit`s report will be pointed out that the audit is conducted in accordance with the ISA for LCE. The ISA for LCE has the following limitations for using: 1.       Specific classes of entities for which the use of the ISA for LCE is prohibited (described below). 2.       Qualitative characteristics that describe an LCE. Qualitative characteristics relate to business activities, business model & indus

  Interim financial information is financial information that is prepared and presented in accordance with an applicable financial reporting framework and comprises either a complete or a condensed set of financial statements for a period that is shorter than the entity’s financial year. A review is designed to provide limited assurance that the interim financial information is free from material misstatement. Limited assurance engagement is an assurance engagement in which the practitioner reduces engagement risk to a level that is acceptable in the circumstances of the engagement but where that risk is greater than for a reasonable assurance engagement and the practitioner’s conclusion is expressed in a negative form. Review of interim financial information could be required in following situations: ·         Some stock exchanges require listed companies to provide a review of interim financial statements performed by independent auditors. ·         Banks sometimes ask companies

  A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments are used by financial and non-financial entities of all sizes for a variety of purposes. Some entities have large holdings of financial instruments and vast volumes of transactions while other entities may only engage in a few financial instrument transactions. Entities used financial instruments for different purposes, for example: ● Hedging purposes (that is, to change an existing risk profile to which an entity is exposed). ● Trading purposes (for example, to enable an entity to take a risk position to benefit from short term market movements); and ● Investment purposes (for example, to enable an entity to benefit from long term investment returns). The complexity of financial instruments may increase the business risks for entities and risk of material misstatement of financial statements. This