Sample Disclosure in Financial Statements – Page 6

Sample Disclosure – Share Based Employee Compensation Scheme, ESOS (25 November 2009)

Share-based Employee Compensation Scheme – ESOS

The Company’s Employee Share Options Scheme (“ESOS”) is a share-based, equity-settled employee compensation scheme. The ESOS allows the employees of the Company acquiring the shares of the Company upon fulfilling certain conditions.

The total fair value of share options granted employees is recognised as an employee costs in the income statement with the corresponding increase in the share option reserve in the equity section of the Company over the vesting period of the ESOS taking into account the probability that the ESOS will vest.

The fair value of ESOS is measured at Grant Date, taking into account, if relevant, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in the assumptions about the number of options that are expected to become exercisable on Vesting Date.

At each balance sheet date, the Company revises its estimates of the number of options that are expected to become exercisable on Vesting Date. It recognises the impact of the revision of the original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium account, or until the option expires, it will be transferred to retained earnings of the Company.

The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.

Sample Disclosure – Accounting Policy Of Employee Equity Compensation Benefits (ESOS) (24 November 2009)

EMPLOYEE EQUITY COMPENSATION BENEFITS

The Employees’ Share Option Schemes (“ESOSs”) of the Company and a subsidiary grant the Group’s eligible employees options to subscribe for shares in the Company and the subsidiary at pre-determined subscription prices. These equity compensation benefits are recognised as an expense with a corresponding increase in equity over the vesting period as share option reserve. The total amount to be recognised is determined by reference to the fair value of the share options at grant date and the estimated number of share options expected to vest on vesting date.

Sample Disclosure – Accounting Policy Of Biological Assets (22 November 2009)

Biological Assets

All expenses incurred in land preparation, planting and development of crops up to maturity are capitalised as biological assets; all expenses subsequent to maturity are recognised directly in income statement.

Biological assets are stated at revalued amount, which is the fair value at date of revaluation less any accumulated impairment losses. Fair value is determined by market-based evidence by appraisal that is carried out by professionally qualified valuers. Revaluation of biological assets are carried out at sufficient regularity and any material differences are adjusted accordingly to ensure that the carrying value of the assets does not differ materially from the fair values determined as at balance sheet date.

Any revaluation surplus is credited to the revaluation reserve account, except that if the surplus reverses the previously recognised revaluation decrease in income statement of the same asset, such surplus would be recognised in income statement until it completely reverses the previously recognised revaluation decrease before any excess amount of surplus is recognised in the revaluation reserve account within equity. Such revaluation reserve account is classified as part of non-distributable reserves within equity section of the Company.

A revaluation decrease is first recorded as a set-off against the amount of previously recognised revaluation surplus in equity of the same asset and any balance of revaluation decrease thereafter are recognised in income statement.

Upon disposal or retirement of biological assets, the differences between the disposal proceeds and the carrying value of such biological assets are recognised as gains or losses in income statement accordingly. Any balance of revaluation reserve account for such assets are then transferred to retained earnings and thereafter is available for distribution to the equity holders of the Company.

Sample Disclosure – Accounting Policy Of Inventories, Oil Palm Sector (20 November 2009)

Inventories

Inventories of the Group and of Company comprise the following:-

Harvested Oil Palm Fruits
Work-in-progress and Finished Palm Oil Products
Oil Palm Seedlings
Stores and Consumable Supplies

The above inventories are stated at the lower of cost (determined using first-in-first-out basis) and net realisable value. Cost of harvested oil palm seeds, oil palm seedlings and stores and consumable supplies comprise costs incurred in bringing the these inventories to their present location and condition. The cost of work-inprogress and finished palm oil products includes materials, labour and an appropriate proportion of manufacturing overhead.

Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution as relevant to each type of inventories.

The carrying value of any obsolete inventories is written off as an expense in income statement.

Allowance for decrease in value is made for obsolescence and deterioration for each specific type of inventories accordingly should these inventories are carried within the Group and the Company longer than their normal operating cycles.

Sample Disclosure – Auditors’ Report With Qualified Audit Opinion (13 November 2009)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ABC BERHAD (12345–X)

Report on the Financial Statements

We have audited the financial statements of ABC BERHAD, which comprise the balance sheets as at 30 June 2009 of the Group and of the Company, and the income statements, statement of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Pages XX to XX.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Except as described in the Basis for Qualified Opinion paragraph below, we conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion

A major portion of the financial records of a branch have been destroyed by fire. As a result, the Company is unable to re-produce the financial statements of this branch and hence no such financial statements were made available to us for our audit. The current year financial statements of the Group and of the Company have excluded this branch. Therefore, our audit of the Group and of the Company excludes this branch and we do not consider the financial effect of this branch on the financial statements of the Group and of the Company.
The financial statements of the Group were prepared based on the financial statements of the Company and all of its subsidiaries. However, for this purpose unaudited financial statements of two foreign subsidiaries, DEF Pte. Ltd. and GHI Ltd. were used. At the date of this report, the auditors of these two subsidiaries have not completed the audit and hence have not replied to our Group Audit Questionnaire and have refused our request to review their audit work papers which we intend to rely upon to express our opinion as to whether we are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements. The directors have given us written assurance that they do not expect significant and material differences between the unaudited financial statements and the audited financial statements to be issued later upon completion of audit of these two subsidiaries. As a result, we wish to report that the Group’s financial statements are subject to changes that may be of significant and material in nature, depending on the outcome of the audit of the financial statements of these two foreign subsidiaries.

Qualified Opinion

In our opinion, except for the effects of the adjustments on the financial statements, if any, as mentioned in the preceeding paragraph, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2009 and of their financial performance and the cash flows for the financial year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

a) In our opinion, except for effect of the matters described in the Basis for Qualified Opinion paragraph above, the accounting and other records and registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the financial statements and the auditors’ reports of subsidiaries of which we have not acted as auditors, which are indicated in Note XX to the financial statements.

c) Except for the effect of the matters as described in the Basis for Qualified Opinion paragraph above the financial statements, we are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

d) Except for the two foreign subsidiaries mentioned in Paragraph 2 of our Basis of Qualified Opinion above, the auditors’ reports on the financial statements of the other subsidiaries were not subject to any other qualification significant and material to the consolidated financial statements and did not include any comment required to be made under Section 174 (3) of the Act.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

_______________________

XYZ & CO.

AF 1234

CHARTERED ACCOUNTANTS

____________________

BENJAMIN WONG

1234/01/11(J)

CHARTERED ACCOUNTANT

WONDERLAND, MALAYSIA

10 November 2009