income and expense in accordance with paragraph 12 of AS 5 include reversals of provisions. The company had netted off the reversal and additional provision and had shown the net debit of ` 2 lakhs in Statement of Profit & Loss. This practice does not seem to be good as per AS 5. Company may show the net debit in Statement of Profit & Loss but should disclose the facts of write back and additional provision made during the © The Institute of Chartered Accountants of India
7.21 Auditing and Assurance year by way of note. The Company's accounting treatment is wrong and it may warrant audit qualifications. (d) Segmental Reporting: As per AS 17 “Segment Reporting”, the company accounts must be presented according to the primary classification based on nature of income and expenses and therefore segment results are to be disclosed accordingly. The result of segment should be disclosed in terms of segment revenue and segment expense. In the instant case, the company has two business segments namely assembly and transportation. These two segments should be properly identified. In this case, company should add note to show segment result after computation. It is not necessary that segment-wise details of each and every expenditure and revenue should be specified. Question 18 M/s Seeman & Co. had been the company auditor for Amudhan Company Limited for the year 2014-15. The company had three branches located at Chennai, Delhi and Mumbai. The audits of branches-Chennai, Delhi were looked after by the company auditors themselves. The audit of Mumbai branch had been done by another auditor M/s Vasan & Co., a local auditor situated at Mumbai. The branch auditor had completed the audit and had given his report too. After this, but before finalization, the company auditor wanted to visit the Mumbai branch and have access to the inventory records maintained at the branch. The management objects to this on the grounds of the company auditor is transgressing the scope of audit areas agreed. Comment. Answer Right of Access of Company Auditor for Branch Records: The audit of the branch of a company is dealt with in Section 143(8) of the Companies Act, 2013. According to this section, the audits of the branches can be done by the company auditor himself or by another auditor. Even where, the branch accounts are audited, the company auditor has right to visit the branch if he deems it necessary to do so for the performance of his duties as auditor. He has also right of access at all times to the books and accounts and vouchers of the company maintained at the branch office. He can appropriately deal with the repot of the branch auditor in framing his main repot. He will disclose how he had dealt with the branch audit report. In this case, the audits of two branches were done by the company auditor and one branch was done by a separate branch auditor.
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- Accountant, Auditor's report, First Auditor