09-16-2003, 07:50 PM
Thanx Pervez,
I need little bit more clarification,
the company's contention about the said matter is that they will fight with the bank for waiver of additional mark up, and they are confident that the matter will be decided in company's favour, thats why they are treating the said amount as contingent liability,
and further they say that it will not effect the usefulness of the financial statements as they are disclosing the figure, which is obviously a material figure, in the financial statements that they have not provided the mark up in the accounts amounting to Rs. so and so, to enable the reader to compute the profit after the accrual of said markup,
but the auditor says, as the mark up relates to previous and current financial period, and it is factual not contingent, so it would have been charged in the accounts.
The agreement is silent about the markup in case of further default on part of the company.
But generally, if the company has defaulted in making payment on due time, it means it has utilized the funds for further 2 years, so it must provide the mark up in books of accounts,
now back to my confusion,
I agree if the company neither provides the markup nor make any disclosure regarding under provision of markup, the auditor must qualify the report.
but if the company doesnt provide mark up but discloses the total financial effect and related disclosures regarding matters thereof, Can auditor just put a matter of emphasis in his report without qualifying his opinion.
S M R
Edited by - smraza on Sep 16 2003 33508 PM
I need little bit more clarification,
the company's contention about the said matter is that they will fight with the bank for waiver of additional mark up, and they are confident that the matter will be decided in company's favour, thats why they are treating the said amount as contingent liability,
and further they say that it will not effect the usefulness of the financial statements as they are disclosing the figure, which is obviously a material figure, in the financial statements that they have not provided the mark up in the accounts amounting to Rs. so and so, to enable the reader to compute the profit after the accrual of said markup,
but the auditor says, as the mark up relates to previous and current financial period, and it is factual not contingent, so it would have been charged in the accounts.
The agreement is silent about the markup in case of further default on part of the company.
But generally, if the company has defaulted in making payment on due time, it means it has utilized the funds for further 2 years, so it must provide the mark up in books of accounts,
now back to my confusion,
I agree if the company neither provides the markup nor make any disclosure regarding under provision of markup, the auditor must qualify the report.
but if the company doesnt provide mark up but discloses the total financial effect and related disclosures regarding matters thereof, Can auditor just put a matter of emphasis in his report without qualifying his opinion.
S M R
Edited by - smraza on Sep 16 2003 33508 PM
