FUNDAMENTALS OF AUDITING ACC311 Lec 10
Lesson 10
BOOKS OF ACCOUNT &
FINANCIAL STATEMENTS
1. Books of Account to
be kept by Company [Section-230]
1.1 A company should
keep proper books of account in respect of:
e) Cash received and
expended by the company;
f) Sales and purchases
of goods by the company;
g) All Assets and liabilities
of the company; and
h) In case of a company
engaged in production, processing, manufacturing, or mining activities, a
production record as may
be required by the Commission through a general or special order;
1.2 Books of account
should be preserved for ten years;
1.3 Books of account are
to be kept at the registered office of the company. If kept at any other
place,
the registrar should be
informed;
1.4 Books of account
should give a true and fair view of the state of affairs of the company and should
contain explanation of
transactions.
1.5 Directors can
inspect the books of account during the business hours.
1.6 If company fails to
comply with the above provisions a director, including chief executive and
chief
(a) of listed company is
liable to imprisonment for one year and a fine of not less than Rs.
20,000
not more than Rs.
50,000, and a further fine of Rs. 5000 per day during which the default
continues;
or
(b) of other companies
is liable to imprisonment for six months and with a fine, which may extend
to Rs. 10,000
2. Annual Accounts and
Balance Sheet [Section 233]
2.1 First annual
accounts of a company must be presented before the AGM within eighteen
months
from the date of
incorporation.
2.2 A subsequent annual
accounts should be presented once at least in every calendar year before
an
AGM. In other words, the
accounts should be presented in the AGM within three months of the
date of balance sheet.
However, in the case of a listed company the Commission and in other cases
the registrar can extend
this period for a term not exceeding two months.
2.3 The accounts should
be made up, in the case of first accounts, from the date of incorporation, and
in the case of
subsequent accounts, from the date of the preceding accounts to a date not
earlier
than the date of the
meeting by more than four months.
2.4 The accounts shall
be prepared for a period not exceeding 12 months, except in case where
permission is granted by
the registrar for preparation of accounts for a longer period.
2.5 Profit and Loss
account and Balance Sheet shall be audited by the auditor and auditor’s report
should be attached
thereto.
2.6 Copy of accounts,
auditor’s report and directors’ report should be sent to every member at least
twenty-one days before
the Annual General Meeting (AGM).
2.7 Listed companies are
required to send five copies of their audited accounts to the registrar, the
Commission and the stock
exchange within 30 days.
3. Contents of Balance
Sheet [Section 234]
3.1
General:
a) Balance Sheet and
Profit & Loss Account should give a true and fair view of the state of the
company’s affairs and of
the profit or loss of the company.
b) An item of
expenditure fairly chargeable to income shall be brought into account.
c) Any expenditure which
in fairness can be distributed over several years but is incurred in one
year should be so
distributed and reasons for doing so should be given.
3.2
For Listed
Companies and Private or Non Listed Public Companies Which is a
Subsidiary
of a Listed Company:
a) Balance Sheet and
profit and loss account should be prepared in accordance with Fourth
Schedule;
36
b) A statement of
changes in equity and cash flow statement.
c) Accounting policies
should be stated and, where there is any change in accounting polices
the auditor shall report
whether he agrees with the change.
d) International
Financial Reporting Standards as adopted by SECP should be followed in
preparation of accounts.
3.3
For Other
Companies:
a) Balance Sheet and
profit and loss account shall be prepared in accordance with the
Fifth Schedule;
b) A statement of
changes in equity and cash flow statement.
c) Accounting policies
should be stated and, where there is any change in accounting
polices the auditor
shall report whether he agrees with the change.
d) International
Financial Reporting Standards as adopted by SECP should be
followed in preparation
of accounts.
Limited Liability
Company
Balance Sheet
As on December 31,
2006
Rs. Rs.
Assets
Non Current Assets
Fixed Assets
Tangible
Assets ***
Intangible
Assets ***
***
Long Term
Investments ***
Long Term
Advances, Deposits & Prepayments ***
Deferred
Cost ***
Current Assets
***
Current
Liabilities (***)
***
Capital Employed
***
Financed By
Owners’ Equity
Ordinary Share
Capital ***
Reserves
Capital
Reserves ***
Revenue
Reserves ***
***
***
Non Current Liabilities
Loan Stocks/Term
Finance Certificates ***
Loan from financial
institutions ***
Finance lease
liability ***
***
**
Chief Executive
Director
37
Limited Liability
Company
Income Statement
For the Year ended
December 31, 2006
Rs. Rs.
Sales
***
Cost of goods sold
(***)
Gross profit
***
Operating expenses
Administrative
expense ***
Selling &
Marketing expenses ***
***
Profit from
operations ***
Other income
***
Financial expenses
***
Profit before tax
***
Income tax expense
***
Profit after tax
***
Limited Liability
Company
Statement of changes in
equity
For the year ended
December 31, 2006
Rs. Rs.
Retained profits
b/f ***
Profit after tax
***
Dividend paid
***
Transfer to
reserves ***
(***)
Retained profits
c/f ***
Chief Executive
Director
38
4. Treatment of Surplus
Arising on Revaluation of Fixed Assets [Section 235]
4.1 Any surplus on
revaluation of fixed assets should be transferred to an account named “Surplus
on
revaluation of fixed
assets account”.
4.2 This account should
be shown in the balance sheet after capital and reserves;
4.3 Surplus on revaluation
shall not be set off or reduced except:
a) For setting of any
decrease in revaluation of asset; or
b) When revalued asset
is disposed of, surplus relating to it can be adjusted or set off.
4.4 Depreciation on
assets which are revalued shall be determined with reference to the value
assigned
to such assets on
revaluation and depreciation charge for the period shall be taken to the Profit
and
Loss Account;
4.5 An amount equal to
incremental depreciation for the period shall be transferred from “Surplus on
Revaluation of Fixed
Assets Account” to un-appropriated profit / accumulated loss through
Statement of Changes in
Equity to record realization of surplus to the extent of the incremental
depreciation charge for
the period;
4.6 An amount equal to
incremental depreciation charged in previous years may be transferred from
“Surplus on Revaluation
of Fixed Assets Account” to un-appropriated profit / accumulated loss
through Statement of
Changes Equity.
5. Director’s Report
[Section 236]
5.1 Director’s report
shall be attached to the Balance Sheet.
5.2 It shall state
business affairs, proposed dividend, if any, amounts set aside to reserve, if
any.
5.3 In the case of a
public company or a private company which is a subsidiary of a public
company
director’s report shall
also include:-
a) Disclosure of any
material changes and commitments affecting the financial position which
have occurred between
the year end and the date of report;
b) Disclosure of any
material changes in the nature of business etc., which have occurred
during the year, if the
disclosure is necessary for understanding the state of the company’s
affairs.
c) Explanation to any
qualification in auditor’s report.
d) Pattern of holding of
shares (percentage of shares held by the parties).
e) Name and country of
incorporation of holding company if any, where such holding
company is established
outside Pakistan.
f) The earning per
share.
g) Reasons for incurring
loss and reasonable indication of future prospects of profit, if any.
h) Information about
defaults in payment of debts, if any, and reasons thereof.
5.4 The directors of a
holding company required to prepare consolidated financial statements under
section 237 shall make
out and attach to consolidated financial statements, a report with respect to
the state of group’s
affairs and all provisions of subsection (2), (3) and (4) shall apply to such
report.
5.5 Director’s Report
shall be signed by the chairman or the chief executive, if so authorized by
the
directors; otherwise by
the chief executive and a director.
6. Balance Sheet of
Holding Companies [Section 237]
6.1 Consolidated
Financial Statements
(1) There shall be
attached to the financial statements of a holding company having a
subsidiary or
subsidiaries, at the end of the financial year at which the holding company's
financial statements are
made out, consolidated financial statements of the group presented
as those of a single
enterprise and such consolidated financial statements shall comply with
the disclosure
requirement of the Fourth Schedule and International Accounting Standards
notified under
sub-section (3) of section 234.
(2) Where the financial
year of a subsidiary precedes the day on which the holding company's
financial year ends by
more than three months, such subsidiary shall make an interim
closing on the day on
which the holding company's financial year ends, and
prepare
financial
statements for consolidation purposes.
39
(3) Every auditor of a
holding company appointed under section 252 shall also report on
consolidated financial
statements and exercise all such powers and duties as are vested in
him under section
255.
(4) All interim
financial statements of a subsidiary as required under sub-section (3) shall be
reviewed by the auditors
of that subsidiary appointed under section 252 who shall report
on such financial
statements in the prescribed form.
(5) There shall be
disclosed in the consolidated financial statements,-
(a) any qualifications
contained in the auditors' reports on the accounts of subsidiary or
subsidiaries for the
financial year ending with or during the financial year of the
holding company;
and
(b) any material note or
explanation on a qualification, regarding to but not covered in the
financials statements of
a parent company.
(6) Every consolidated
financial statement shall be signed by the same persons by whom the
individual balance sheet
and the profit and loss account or income and expenditure
account of the holding
company are required to be signed under section 241.
(7) All provisions of
sections 233, 242, 243, 244 and 245 shall apply to a holding company
required to prepare
consolidated financial statements under this section as if for the word
"company"
appearing in these section, the words "holding company" were substituted.
(8) The Commission may,
on an application or with the consent of the directors of a holding
company, direct that in
relation to any subsidiary, the provisions of this section shall not
apply to such extent
only as may be specified in the direction.
(9) If a holding company
fails to comply with any requirement of this section, every officer of
the holding company
shall be punishable with fine which may extend to fifty thousand
rupees in respect of
each offense unless he shows that he took all reasonable steps for
securing compliance by
the holding company of such requirements and that the noncompliance
or
default on his
part was
not willful
and intentional".
6.2 The directors shall
ensure that year-end of the holding and its subsidiary companies shall coincide
except where there are
good reasons against it. The SECP shall facilitate the companies in this
regard by allowing them
to prepare accounts of extended period, hold AGM accordingly and file
annual return after the
holding of extended AGM. [Section 238]
7. Balance Sheet of
Modaraba Company [Section 240]
Modaraba companies are
required to attach financial statements and other reports circulated to
Modaraba certificate
holders with their financial statements.
8. Authentication of
Balance Sheet [Section- 241]
8.1 Accounts should be
approved by the Board of Directors.
8.2 Balance Sheet shall
be signed by the chief executive and one director. If chief executive is out
of
Pakistan for the time
being then it shall be signed by two directors and a statement shall be given
by
the directors explaining
reasons thereof.
9. Copy of Balance Sheet
to be forwarded to the Registrar (Section 242)
9.1 Three copies of
listed company’s audited accounts and the auditor’s report duly signed by
the
management and auditors
should be filed with the registrar within thirty days from the AGM.
9.2 In other cases two
copies are required.
9.3 Private Companies
are not required to file their accounts with the registrar.
10. Right of
Members/Debenture-Holders of Company to Copy of the Accounts and the
Auditor’s Report
[Section-243 & 247]
Members have the right
to get copy of annual accounts etc. of company on payment. The same
rights are available to
debenture-holders or trustees for debenture-holders.
11. Quarterly Accounts
of Listed Companies [Section (245)]
All listed companies
shall within one month of the close of every quarter of their year of account,
prepare and transmit to
the members and the stock exchange(s) on which their shares are listed, a
40
profit and loss account
for, and balance sheet as at the end of that quarter, whether audited or
otherwise. They shall
file with the registrar and the Commission three copies thereof.
Quarterly accounts shall
be circulated for the 1
st
, 2
nd
and 3
quarter within one
month of the close
of that quarter.
Approval of the board of
directors will be mandatory for circulation of the quarterly accounts.
rd
If a company fails to
comply with any of the requirements of this section, every director including
chief executive and
chief accountant of the company who has knowingly by his act or omission
been the cause of such
default shall be liable to a fine of not exceeding one hundred thousand
rupees and to a further
fine of not exceeding one thousand rupees per day during which default
continues.
12. Additional Statement
of Accounts and Reports [Section 246]
12.1 The SECP may by
general or special order, require companies, or a class of companies or
any
particular company, to
prepare and send to the members, the registrar, the SECP, a stock exchange
and any other person
such periodical statements of accounts, information or other reports in such
form and manner and
within such time, as may be specified in the order.
12.2 The Securities and
Exchange Commission of Pakistan vide circular No. 23/2005, has directed to all
listed companies and
their subsidiaries to provide: -
a) Other Information
contained in their annual report, as such term is defined in International
Standard on Auditing 720
(Other Information in the Documents Containing Audited Financial
Statements), to their
external auditor (s); and
b) Sufficient time to
their external auditor (s) to review and comment upon any “material
inconsistencies” found
in such Other Information where the other information may contradict the
information contained in
the audited financial statements. Listed companies and their subsidiaries
are required to comply
with this directive from the period commencing 1
January 2006.
Auditor’s interest in
the statutory books
The auditor is
interested in the statutory books because:
st
– They are directly
concerned with the Accounts
– They are audit
evidence to be used in verifying detailed items in the accounts; for example
the
total share capital
shown by the sum of the individual share holdings in the register of members
must agree with the
share capital recorded in the books of accounts
– Failure to maintain
proper records of any sort casts doubt upon the accuracy and reliability of
the records generally
Lesson 10
BOOKS OF ACCOUNT &
FINANCIAL STATEMENTS
1. Books of Account to
be kept by Company [Section-230]
1.1 A company should
keep proper books of account in respect of:
e) Cash received and
expended by the company;
f) Sales and purchases
of goods by the company;
g) All Assets and liabilities
of the company; and
h) In case of a company
engaged in production, processing, manufacturing, or mining activities, a
production record as may
be required by the Commission through a general or special order;
1.2 Books of account
should be preserved for ten years;
1.3 Books of account are
to be kept at the registered office of the company. If kept at any other
place,
the registrar should be
informed;
1.4 Books of account
should give a true and fair view of the state of affairs of the company and should
contain explanation of
transactions.
1.5 Directors can
inspect the books of account during the business hours.
1.6 If company fails to
comply with the above provisions a director, including chief executive and
chief
(a) of listed company is
liable to imprisonment for one year and a fine of not less than Rs.
20,000
not more than Rs.
50,000, and a further fine of Rs. 5000 per day during which the default
continues;
or
(b) of other companies
is liable to imprisonment for six months and with a fine, which may extend
to Rs. 10,000
2. Annual Accounts and
Balance Sheet [Section 233]
2.1 First annual
accounts of a company must be presented before the AGM within eighteen
months
from the date of
incorporation.
2.2 A subsequent annual
accounts should be presented once at least in every calendar year before
an
AGM. In other words, the
accounts should be presented in the AGM within three months of the
date of balance sheet.
However, in the case of a listed company the Commission and in other cases
the registrar can extend
this period for a term not exceeding two months.
2.3 The accounts should
be made up, in the case of first accounts, from the date of incorporation, and
in the case of
subsequent accounts, from the date of the preceding accounts to a date not
earlier
than the date of the
meeting by more than four months.
2.4 The accounts shall
be prepared for a period not exceeding 12 months, except in case where
permission is granted by
the registrar for preparation of accounts for a longer period.
2.5 Profit and Loss
account and Balance Sheet shall be audited by the auditor and auditor’s report
should be attached
thereto.
2.6 Copy of accounts,
auditor’s report and directors’ report should be sent to every member at least
twenty-one days before
the Annual General Meeting (AGM).
2.7 Listed companies are
required to send five copies of their audited accounts to the registrar, the
Commission and the stock
exchange within 30 days.
3. Contents of Balance
Sheet [Section 234]
3.1
General:
a) Balance Sheet and
Profit & Loss Account should give a true and fair view of the state of the
company’s affairs and of
the profit or loss of the company.
b) An item of
expenditure fairly chargeable to income shall be brought into account.
c) Any expenditure which
in fairness can be distributed over several years but is incurred in one
year should be so
distributed and reasons for doing so should be given.
3.2
For Listed
Companies and Private or Non Listed Public Companies Which is a
Subsidiary
of a Listed Company:
a) Balance Sheet and
profit and loss account should be prepared in accordance with Fourth
Schedule;
36
b) A statement of
changes in equity and cash flow statement.
c) Accounting policies
should be stated and, where there is any change in accounting polices
the auditor shall report
whether he agrees with the change.
d) International
Financial Reporting Standards as adopted by SECP should be followed in
preparation of accounts.
3.3
For Other
Companies:
a) Balance Sheet and
profit and loss account shall be prepared in accordance with the
Fifth Schedule;
b) A statement of
changes in equity and cash flow statement.
c) Accounting policies
should be stated and, where there is any change in accounting
polices the auditor
shall report whether he agrees with the change.
d) International
Financial Reporting Standards as adopted by SECP should be
followed in preparation
of accounts.
Limited Liability
Company
Balance Sheet
As on December 31,
2006
Rs. Rs.
Assets
Non Current Assets
Fixed Assets
Tangible
Assets ***
Intangible
Assets ***
***
Long Term
Investments ***
Long Term
Advances, Deposits & Prepayments ***
Deferred
Cost ***
Current Assets
***
Current
Liabilities (***)
***
Capital Employed
***
Financed By
Owners’ Equity
Ordinary Share
Capital ***
Reserves
Capital
Reserves ***
Revenue
Reserves ***
***
***
Non Current Liabilities
Loan Stocks/Term
Finance Certificates ***
Loan from financial
institutions ***
Finance lease
liability ***
***
**
Chief Executive
Director
37
Limited Liability
Company
Income Statement
For the Year ended
December 31, 2006
Rs. Rs.
Sales
***
Cost of goods sold
(***)
Gross profit
***
Operating expenses
Administrative
expense ***
Selling &
Marketing expenses ***
***
Profit from
operations ***
Other income
***
Financial expenses
***
Profit before tax
***
Income tax expense
***
Profit after tax
***
Limited Liability
Company
Statement of changes in
equity
For the year ended
December 31, 2006
Rs. Rs.
Retained profits
b/f ***
Profit after tax
***
Dividend paid
***
Transfer to
reserves ***
(***)
Retained profits
c/f ***
Chief Executive
Director
38
4. Treatment of Surplus
Arising on Revaluation of Fixed Assets [Section 235]
4.1 Any surplus on
revaluation of fixed assets should be transferred to an account named “Surplus
on
revaluation of fixed
assets account”.
4.2 This account should
be shown in the balance sheet after capital and reserves;
4.3 Surplus on revaluation
shall not be set off or reduced except:
a) For setting of any
decrease in revaluation of asset; or
b) When revalued asset
is disposed of, surplus relating to it can be adjusted or set off.
4.4 Depreciation on
assets which are revalued shall be determined with reference to the value
assigned
to such assets on
revaluation and depreciation charge for the period shall be taken to the Profit
and
Loss Account;
4.5 An amount equal to
incremental depreciation for the period shall be transferred from “Surplus on
Revaluation of Fixed
Assets Account” to un-appropriated profit / accumulated loss through
Statement of Changes in
Equity to record realization of surplus to the extent of the incremental
depreciation charge for
the period;
4.6 An amount equal to
incremental depreciation charged in previous years may be transferred from
“Surplus on Revaluation
of Fixed Assets Account” to un-appropriated profit / accumulated loss
through Statement of
Changes Equity.
5. Director’s Report
[Section 236]
5.1 Director’s report
shall be attached to the Balance Sheet.
5.2 It shall state
business affairs, proposed dividend, if any, amounts set aside to reserve, if
any.
5.3 In the case of a
public company or a private company which is a subsidiary of a public
company
director’s report shall
also include:-
a) Disclosure of any
material changes and commitments affecting the financial position which
have occurred between
the year end and the date of report;
b) Disclosure of any
material changes in the nature of business etc., which have occurred
during the year, if the
disclosure is necessary for understanding the state of the company’s
affairs.
c) Explanation to any
qualification in auditor’s report.
d) Pattern of holding of
shares (percentage of shares held by the parties).
e) Name and country of
incorporation of holding company if any, where such holding
company is established
outside Pakistan.
f) The earning per
share.
g) Reasons for incurring
loss and reasonable indication of future prospects of profit, if any.
h) Information about
defaults in payment of debts, if any, and reasons thereof.
5.4 The directors of a
holding company required to prepare consolidated financial statements under
section 237 shall make
out and attach to consolidated financial statements, a report with respect to
the state of group’s
affairs and all provisions of subsection (2), (3) and (4) shall apply to such
report.
5.5 Director’s Report
shall be signed by the chairman or the chief executive, if so authorized by
the
directors; otherwise by
the chief executive and a director.
6. Balance Sheet of
Holding Companies [Section 237]
6.1 Consolidated
Financial Statements
(1) There shall be
attached to the financial statements of a holding company having a
subsidiary or
subsidiaries, at the end of the financial year at which the holding company's
financial statements are
made out, consolidated financial statements of the group presented
as those of a single
enterprise and such consolidated financial statements shall comply with
the disclosure
requirement of the Fourth Schedule and International Accounting Standards
notified under
sub-section (3) of section 234.
(2) Where the financial
year of a subsidiary precedes the day on which the holding company's
financial year ends by
more than three months, such subsidiary shall make an interim
closing on the day on
which the holding company's financial year ends, and
prepare
financial
statements for consolidation purposes.
39
(3) Every auditor of a
holding company appointed under section 252 shall also report on
consolidated financial
statements and exercise all such powers and duties as are vested in
him under section
255.
(4) All interim
financial statements of a subsidiary as required under sub-section (3) shall be
reviewed by the auditors
of that subsidiary appointed under section 252 who shall report
on such financial
statements in the prescribed form.
(5) There shall be
disclosed in the consolidated financial statements,-
(a) any qualifications
contained in the auditors' reports on the accounts of subsidiary or
subsidiaries for the
financial year ending with or during the financial year of the
holding company;
and
(b) any material note or
explanation on a qualification, regarding to but not covered in the
financials statements of
a parent company.
(6) Every consolidated
financial statement shall be signed by the same persons by whom the
individual balance sheet
and the profit and loss account or income and expenditure
account of the holding
company are required to be signed under section 241.
(7) All provisions of
sections 233, 242, 243, 244 and 245 shall apply to a holding company
required to prepare
consolidated financial statements under this section as if for the word
"company"
appearing in these section, the words "holding company" were substituted.
(8) The Commission may,
on an application or with the consent of the directors of a holding
company, direct that in
relation to any subsidiary, the provisions of this section shall not
apply to such extent
only as may be specified in the direction.
(9) If a holding company
fails to comply with any requirement of this section, every officer of
the holding company
shall be punishable with fine which may extend to fifty thousand
rupees in respect of
each offense unless he shows that he took all reasonable steps for
securing compliance by
the holding company of such requirements and that the noncompliance
or
default on his
part was
not willful
and intentional".
6.2 The directors shall
ensure that year-end of the holding and its subsidiary companies shall coincide
except where there are
good reasons against it. The SECP shall facilitate the companies in this
regard by allowing them
to prepare accounts of extended period, hold AGM accordingly and file
annual return after the
holding of extended AGM. [Section 238]
7. Balance Sheet of
Modaraba Company [Section 240]
Modaraba companies are
required to attach financial statements and other reports circulated to
Modaraba certificate
holders with their financial statements.
8. Authentication of
Balance Sheet [Section- 241]
8.1 Accounts should be
approved by the Board of Directors.
8.2 Balance Sheet shall
be signed by the chief executive and one director. If chief executive is out
of
Pakistan for the time
being then it shall be signed by two directors and a statement shall be given
by
the directors explaining
reasons thereof.
9. Copy of Balance Sheet
to be forwarded to the Registrar (Section 242)
9.1 Three copies of
listed company’s audited accounts and the auditor’s report duly signed by
the
management and auditors
should be filed with the registrar within thirty days from the AGM.
9.2 In other cases two
copies are required.
9.3 Private Companies
are not required to file their accounts with the registrar.
10. Right of
Members/Debenture-Holders of Company to Copy of the Accounts and the
Auditor’s Report
[Section-243 & 247]
Members have the right
to get copy of annual accounts etc. of company on payment. The same
rights are available to
debenture-holders or trustees for debenture-holders.
11. Quarterly Accounts
of Listed Companies [Section (245)]
All listed companies
shall within one month of the close of every quarter of their year of account,
prepare and transmit to
the members and the stock exchange(s) on which their shares are listed, a
40
profit and loss account
for, and balance sheet as at the end of that quarter, whether audited or
otherwise. They shall
file with the registrar and the Commission three copies thereof.
Quarterly accounts shall
be circulated for the 1
st
, 2
nd
and 3
quarter within one
month of the close
of that quarter.
Approval of the board of
directors will be mandatory for circulation of the quarterly accounts.
rd
If a company fails to
comply with any of the requirements of this section, every director including
chief executive and
chief accountant of the company who has knowingly by his act or omission
been the cause of such
default shall be liable to a fine of not exceeding one hundred thousand
rupees and to a further
fine of not exceeding one thousand rupees per day during which default
continues.
12. Additional Statement
of Accounts and Reports [Section 246]
12.1 The SECP may by
general or special order, require companies, or a class of companies or
any
particular company, to
prepare and send to the members, the registrar, the SECP, a stock exchange
and any other person
such periodical statements of accounts, information or other reports in such
form and manner and
within such time, as may be specified in the order.
12.2 The Securities and
Exchange Commission of Pakistan vide circular No. 23/2005, has directed to all
listed companies and
their subsidiaries to provide: -
a) Other Information
contained in their annual report, as such term is defined in International
Standard on Auditing 720
(Other Information in the Documents Containing Audited Financial
Statements), to their
external auditor (s); and
b) Sufficient time to
their external auditor (s) to review and comment upon any “material
inconsistencies” found
in such Other Information where the other information may contradict the
information contained in
the audited financial statements. Listed companies and their subsidiaries
are required to comply
with this directive from the period commencing 1
January 2006.
Auditor’s interest in
the statutory books
The auditor is
interested in the statutory books because:
st
– They are directly
concerned with the Accounts
– They are audit
evidence to be used in verifying detailed items in the accounts; for example
the
total share capital
shown by the sum of the individual share holdings in the register of members
must agree with the
share capital recorded in the books of accounts
– Failure to maintain
proper records of any sort casts doubt upon the accuracy and reliability of
the records generally
Post a Comment
Don't Forget To Join My FB Group VU Vicky
THANK YOU :)