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I am auditing a company whose year end is August 2011. It has an associate with year end is May 2011. In October the Associate declare dividends. Is it correct as an auditor for me to accept the dividend in as income for the client for the year August 2011
Hi
NO! Absolutely not!. A at the year end of your client, there was no dividend receivable from the associate – they had not yet declared a dividend.
IF a dividend had been declared by the associate before 31 August , 2011, then the investing company, your client, would have been correct to record it as investment income. But, in the situation you have described, there is no way that the investing company should record a receivable and investment income
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