disclosure audit

Ashok, I’m sorry if I haven’t previously answered you to your satisfaction.. I did try.

First, let’s deal with one or two “wrong” words that you have used

A statement formerly known as a balance sheet is now referred to as a Statement of Financial POSITION, not a statement of financial statement

“Disclosed” implies inclusion within the NOTES to the financial statements and does not imply that the matter is dealt with numerically neither “in the statement of financial statement” nor in “the statement of comprehensive income statement”

Under IFRS 5 an asset previously held for the long term but that is now re-classified as “held for sale” (or indeed an asset that has been recently acquired with the intention of short term sale) will be shown in the Statement of Financial Position as a separate category of asset

Under the same IFRS the EFFECT of having disposed of an element of the business falling within the definition of a material separately identifiable geographical area of operations or activities will be reflected / accounted for as a discontinued operation within the statement of comprehensive income

There will, in addition, probably be full disclosure of the DETAIL of that reclassification, disposal or discontinuance in the notes to the financial statements

As for auditing these matters ……. you need to ascertain amongst other matters:

completeness, accuracy, materiality, consistency (of treatment when compared with other similar activities in times gone by)

You would also discuss with management, review board minutes, assess how fair values have been arrived at, check additions and calculations, confirm the consideration received on the discontinuance, confirm accuracy and completeness of accounting records, confirm the adequacy of the disclosure of any / all relevant details concerning the reclassification of the AHFS and the suitability of disclosure of the discontinuance.

Basically, Ashok, you would institute audit procedures for these matters in exactly the same way that you would for any amounts / disclosures about any other figures in the financial statements

Does that do it for you this time?

Your evidence is fine – but you could have included other matters such as “evidence that the calculations have been made according to IAS ? IFRS”

“Evidence of fair values provided by external independent experts”

“A record of the discussions with management and the conclusions reached as a result of those discussions”

In addition “Enquiries of management” is NOT evidence. To convert the point into evidence you need “a record of enquiries of management and their responses”

There is a BIG, HUGE difference between “State the further audit procedures that you would recommend” compared with “What evidence would you expect to find on the audit file”

If you these two confused, you will not score for any such as your “enquires of management reasons to sale,asking whether they are actively searching for buyers” because that’s more in the nature of a procedure than evidence that you should expect to find

“Evidence” is using nouns where as “procedures” uses verbs

OK?