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Dear Mike,
Would u kindly advise me any change in accounting treatment on construction contract under IFRS 15, compared with the one under IAS 11 (e.g under IAS 11 , revenue, cost profit recognised based on the stage of completion and expected loss is recognised in full at once)? And, any impact on audit procedure for construction contract?
Thank you very much!!!
Best regards,
Kelly
From what I can see, the IFRS requires the spreading of profits in accordance with services provided. But that’s exactly what the old IAS used to require. The new IFRS seems to lean more heavily towards servce providers with extended period contracts
So I’m thinking that, for a constructor, there will still be the need to determine stage reached and anticipated losses and revenues recognised
As for auditing …. Kelly, put on your common-sense hat! How do you audit anything? You ask appropriate questions to get the answers that will help you to confirm the assertions required for inclusion of the matter within the financial statements
Copies of contracts
Copies of directors’ minutes
Third party confirmations
Physical observations and inspections
Internal controls
Discussions with responsible officials
Calculations
Written representations
Cash matters
Company’s correspondence file with company’s customers
Appropriate disclosure in notes to the financial statementsThere should be enough there to stimulate the thought processes as to how you can audit an IFRS 15 situation
Dear Mike ,
Thank you so much for your kindly reply. It really helps me a lot!!
Best regards,
Kelly
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