Accounting and Auditing

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#13 Is Unutilized Investment Allowances DTA?
2007-06-24 12:31:00
Should untilized investment allowances be recognized as Deferred Tax Assets?It is now generally agreed that unutilized investment allowances should be recognized as Deferred Tax Assets. The unutilized investment allowancs may come under IAS 12 paragraph 34, depends on the fact and circumstances.Companies that have not been recognising DTA in respect of unutilised investment allowances in the past may need to do so (subject of course to the probable future taxable profit test). This would be a change in accounting policy.
More About: Investment , Allowance , Allowances , Allo

#12 Job Advertisement Analysis ( Singapore)
2007-06-22 18:19:00
Seniors/Assistant Managers/Managers, Audit Department The incumbent will work with a team of audit professionals in the Audit Department, providing audit services to a portfolio of diversified clients comprising public listed companies, MNCs, and local conglomerates. The successful candidate can also look forward to other challenges including initial public offerings related work, due diligence and special investigations work.The above positions in the Assurance & Advisory Services call for candidates with an accounting degree/professional qualification recognised by the Institute of Certified Public Accountants of Singapore (ICPAS). You should have at least 3 years of relevant audit experience in a professional practice. The level of appointment will commensurate with experience.This blog entry is intended to provide some snapshot about career opportunities in Big 4 Singapore, audit deparment in particular.One would realize that the door is always open for highly calibre indivi...
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#11 Is computer software intangible assets or PPE?
2007-06-22 15:37:00
Should computer software be classified as intangible assets or Property, Plant & Equipment?IAS 38 clarifies that computer software for a computer controlled machine tool that cannot operate without the specific software is an integral part of the related hardware and it is classified as Property, Plant & Equipment.The same applies to the operating system of a computer and operating systems software. Where the software is not an integral part of the related hardware, computer software is treated as an intangible asset, e.g. application software. For instance, accounting software used for bookkeeping system.
More About: Software , Computer , Asset , Tang

#10 Difference between Accounting and Auditing ( from Financial Perspective
2007-06-21 17:28:00
Back to a fundamental question, what is the difference between accounting and auditing from a financial perspective?A quick answer is: Accounting is a process of preparing the works, Auditing is a process of evaluating & scrutinizing of the work prepared.In other words, accountants are in charged of the day-to-day duties of maintaing the accounts, implementing the board financial strategy, if any. At the end of the period, accountant would produce Finan cial Statement, a summary report of the financial performance throughout the period. Whereas, auditor conduct a check on the accuracy of the financial statements, to ensure that there is no material misstatement of the financial statement prepared.
More About: Difference , Ferenc

#Joke- The accountant couldn't sleep ( stock take implication)
2007-06-21 15:20:00
Kenny, an accountant, who just joined the big 4, was having a hard time sleeping and goes to see his private doctor. "Doctor, I just can't get to sleep at night.""Have you tried counting sheep?""That's the problem - I make a mistake and then spend three hours trying to find it."( Note: This is a common profession behavior while accountants are doing stock take! Haha!)
More About: Joke , Stock , Sleep , The A , Accountant

Is banker's guarantee a contingent liability?
2007-06-20 11:41:00
Companies sometimes have outstanding banker's guarantee such as those given in lieu of deposits, performance guarantees given to customers etc. Such banker's guarantees do not meet the definition of contingent liabilities under FRS 37. The events that may trigger payment by the banks are within the control of the Company and are not uncertain future events. The Company does not have any present obligation until it defaults on payment of lease or fails to perform the contracts. These banker's guarantees should not be described as contingent liabilities of the Company in the financial statements.
More About: Banker , Conti , Gent

Impact of IAS 39/FRS 39 on Staff Loan & Inter-co Loan
2007-06-19 16:11:00
After the implementation of FRS 39, inter-company loans & staff loans borrowed at preferential rates, the fair value of the consideration given would not be the same as the actual amount (cash) given. In fact, the fair value of such loans is the present value (NPV) of all expected future cash receipts discounted at market interest rate ( estimated at the time of disbursement) for a similar loan.After the discounting process with market interest rate, the present value will be lower than its actual amount given; the difference is not a financial asset unless it qualifies for recognition as an asset under another applicable standard (e.g. FRS 38 Intangible Assets)
More About: Inter , Loan , Staff

Risk-based vs Control-based audit approach
2007-06-19 14:49:00
The collapse of enron had not only posted auditors' works under the spot light , but also increased the work load of the auditors. Audit ors are struggling hard to gain market confidence on their works, follwing the demise of Enron, HIH ...There are emerging trend that the audit firm starts to move away from risk-based audit approach, and switching towards control-based approach. This has made the works more cumbersome & more tedious.
More About: Risk , Control , Roach , Base

Unused Tax Losses & Unused Tax Credits (Deferred Tax Assets Implication
2007-06-14 13:51:00
IFRS 12:“A deferred tax asset should be recognized for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and used tax credits can be utilized”If a company has unused tax losses carried forward from previous year (years), some of the companies tend not to recognize the deferred tax asset in its balance sheet. As stated in IFRS 12: “… to the extent that it is probable that future taxable profit will be available against which the unused tax losses …can be utilized”. Assuming XYZ co has been making Net Losses for 2 consecutive years, and the current losses position is strong evidence that XYZ co’s businesses are not doing well, and future profitability is in doubt.In order to “utilize” the unused tax losses carried forward, XYZ co. has to make a profit in next financial year. Unless there are strong reasonable grounds to believe that ‘it is ...
More About: Ferr , Asset , Credits , Tax credit

#Joke - Tax advisor
2007-06-13 15:20:00
John, the tax advisor had just reached home and read the story of Cinderella to his five-year-old daughter for the first time.The little girl was fascinated by the story, especially the part where the pumpkin turns into a golden coach. Suddenly she piped up, "Daddy, when the pumpkin turned into a golden coach, would that be classed as income or a long-term capital gain?"
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#5 Practical Audit Tips- Lesson 1: Cash & Bank
2007-06-13 14:54:00
Cash & Bank balance stands as an asset of the company, and is one of the important element of balance sheet. The primary assertions we concerned are: valuation, existence, right & obligations. From the assertions listed, we are more concerned about the overstatement of the asset.Generally, the audit works involved, including:1. Analytical Procedure (compared the difference between prior year figure to current year figure)2. Cash Book Review3. Obtaining confirmation from respective banks4. Bank Reconciliation Review5. Petty Cash count1. Analytical Procedure Knowing the fluctuations of the cash balances, one would be able to gauge a general idea of what had happen during the year. For instance, a purchase of machine would probably incur a general layout ( assumption: XYZ company paid by cash), a sales of its equity shares, so on and so forth. As a starting ground, we would like to know the profit incurred during the year, adjusted for non-cash items, such as: deprec...
More About: Tips , Audit , Cash , Less

#4 Economist comments on Sarbanes-Oxley Act
2007-06-12 15:25:00
Found an article related to the Sarbanex- Oxley Act (sox), which could trigger our thinking about the time & resources we spent on implementing a desired procedures Was is Worth it? The Econ omist wonders whether the benefits of Sarbanes-Oxley exceed its costs.Alan Greenspan, chairman of the Federal Reserve, spoke up in defence of the statute this week. It was faint praise. He said he was surprised that a law which had been passed so rapidly had worked as well as it has less of an endorsement than it first seemed, since laws dealing with issues as complex as these and passed as rapidly as was Sarbanes-Oxley can normally be expected to fail abjectly.
More About: Comments , Comm

#3 What is big 4
2007-06-12 07:52:00
Big 4 is a short abbreviation for 4 of the audit companies who are dominating the supply of auditing services worldwide. Big 4, namely Price Waterhouse Coopers, Ernst & Young, Deloitte and KPMG have their offices across the different regions in the world.The services provided by Big 4 could be categorized into three main areas: advisory, taxation & audit. There would be different sub-categories within each area. For instance, there are financial service audit, commercial audit (including audit across different industry, e.g. manufacturing), small to medium enterprise audit, US GAAP audit, and others. Each specialization would have a target group (by industry, by region, by accounting standard).Recruitment processes in Big 4 are considered competitive and selective. Since their main focus are corporate client, including the big conglomerate group, they prefer high fliers in the University.
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#2 Accounting Treatment for Bad Debt Recovered
2007-06-11 16:06:00
Assuming a manufacturer, XYZ Ltd who has a number of regular customers ( debtors), who purchased on credit term. However, one of the customer, said ABC Co. has long outstanding debt due to XYZ Ltd. The outstanding position is significantly longer than industry average. Hence, the XYZ Ltd would make a provision of doubtful debt for the amount due for the outstanding debt due from ABC Co.:Dr. Bad Debt Expense XXX Cr. Provision for Doubtful Debt XXXDue to unexpected cash in-flow to ABC Co, and ABC Co. pay off the debt due to XYZ Ltd; hence, in XYZ accounting book, they would reverse the provision made:Dr. Provision for Doubtful Debt XXX Cr. Bad Debt Recovered (P&L) XXX
More About: Treatment , Accounting , Count , Covered

#1 Introduction to "Auditing & Accounting Blog"
2007-06-11 15:43:00
This blog is dedicated to describe normal accounting & auditing practices in place on:1. accounting treatments of certain issues (e.g. prepayment)2. common audit issues3. any other accounting & auditing related topics.4. auditing & accounting career
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