User talk:Marknelly
Our first steps tour and our frequently asked questions will help you a lot after registration. They explain how to customize the interface (for example the language), how to upload files and our basic licensing policy (Wikimedia Commons only accepts free content). You don't need technical skills in order to contribute here. Be bold when contributing and assume good faith when interacting with others. This is a wiki. More information is available at the community portal. You may ask questions at the help desk, village pump or on IRC channel #wikimedia-commons (webchat). You can also contact an administrator on their talk page. If you have a specific copyright question, ask at the copyright village pump. |
|
-- 08:52, 22 June 2011 (UTC)
Financial Statements and Revenue recognition
[edit]Back ground
In this case is an Educational Institution that derives its income from generally fees collection and it provides a service of providing academic and social services to its clients the pupils.
This institution has a mandate to report or present financial statements to the (PTA) that is the “The Parents and Teachers Association”, then to the board of trustees, who demand that the financial statements prepared by the management should be audited so as to ascertain and rid the report from material misstatements and misrepresentations.
For the case of the audit exercise we were provided with school fees ledgers, expenditure ledgers, payment vouchers, cash books, bank statements, receipt books and bank slips as audit requirements.
Issue 1: The school’s accountant did not preparer any financial statements for the year ended in lieu but rather provided only records of the schools daily transactions.
With such a scenario the client did not comply with IAS 1 which states that “an entity shall apply this standard by preparing and presenting general purpose financial statements in accordance with the International Financial Reporting Standards
So it was upon the auditor to prepare the financial statements by extracting data form the records provided and then after that do the audit
Issue 2:
The institution collected fees in all the various forms of payment ranging from bank drafts, checks, bank deposits, and cash payments which were made at the school premise. The accountant did not maintain a list of names or students who made their payments in cash at the school office.
In this situation the institution did not comply with IAS 18 which states “that entities record when revenue is realized or realizable or earned and not when received. Revenue is recognized when it is probable that the future economic benefits will flow to the entity and these benefits could be measured reliably”.
With out compliance with IAS 18 by the client, this made verification of income receipts very hard since there were no lists of students provided for those who had paid in cash. Further more we could not satisfactorily ascertain how much money was received by the school office.