Category: Sample Disclosure in Financial Statements

Sample Disclosure – Accounting Policy Of Defined Benefit Employee Retirement Plan (13 November 2009)

Defined benefit plan

The Company’s net obligation in respect of its defined benefit retirement plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current financial year and prior periods; the benefit is discounted to determine the present value. Any unrecognised past service costs and the fair value of the plan assets are deducted. The discount rate is the yield at the end of the financial year on high quality corporate bonds or government bonds that have maturity date approximating the terms of the Company’s obligation and are denominated in the same currency in which benefits are expected to be paid.

The calculation is performed by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the net total of any unrecognised past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.

When the benefits of the plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement.

In calculating the Company’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the defined benefit obligation and the fair value of plan assets, if any, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised.

The latest actuarial valuation was performed in Year 2008.

Sample Disclosure – Accounting Policy On Government Grant (12 November 2009)

Government Grants

Government grants are recognised at fair value when there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. Grants related to purchase of assets are treated as deferred income and allocated to income statement over the useful lives of the related assets while grants related to expenses are treated as other income in the income statement.

Sample Disclosure – Auditors’ Report Of Companies With Associates and or Jointly Controlled Entities But Do Not Have Any Subsidiaries (11 November 2009)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ABC BERHAD

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 Economic Entity and of the Company and the income statements, statements of changes in equity and cash flow statements for the year then ended of the Economic Entity and of the Company, 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. 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.

Audit Opinion

In our opinion, 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 Economic Entity and of the Company as of 30 June 2009 and of their financial performance and cash flows for the 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 that in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions 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.

 

 

(Name Of Audit Firm)

[AF: 1234]

Chartered Accountants

 

 

 

(Name Of Partner)

[1234/05/11 (J/PH)]

Chartered Accountant

Wonderland, Malaysia

Date:

 

Note: This sample independent auditors’ report uses the term “Economic Entity” to describe the financial statements comprising the associates and/or jointly controlled entities ONLY with NO SUBSIDIARIES. An entity should define the composition of the “Economic Entity” in the financial statements. Other terms such as “Group” is not suitable to describe such financial statements as “Group” is defined in FRS 127, Consolidated and Separate Financial Statements to include a parent and its subsidiaries. This requirement applies to those companies that need to comply with Financial Reporting Standards in Malaysia and not Private Entities Reporting Standards. For those companies that need to comply with Private Entities Reporting Standards, investment in associates and/or jointly controlled entities are stated in the separate financial statements of the investor at cost or revalued amount.

Sample Disclosure – Note On Early Adoption Of Accounting Standards, FRS 123 Borrowing Costs (10 November 2009)

Early Adoption Of Accounting Standards – FRS 123 Borrowing Costs

The Company has applied early adoption of FRS 123, Borrowing Costs for the current financial year although compliance with this standard is mandatory only with effect from 1 January 2010. The effect of the change in the accounting policy due to the early adoption of FRS 123 increased the profit before tax of the Company by RM1,000,000 for the current financial and increased its property, plant and equipment as at balance sheet date by the same amount.

Sample Disclosure – Note On Correction Of Prior Year Errors (8 November 2009)

Adjustment Made In Respect Of Correction Of Prior Year Error

In the previous financial year, a wholly owned subsidiary company declared an interim tax exempt dividend of RM0.10 per share on its 10,000,000 ordinary shares of RM1/- each amounting to RM1,000,000. However, the dividend was omitted from recording in the financial statements of the subsidiary company in the previous financial year.

The error was detected during the current financial year and in accordance with the requirement stated in FRS108 Accounting Policies, Changes in Accounting Estimates and Errors, the dividend is now recognised retrospectively and certain comparative figures has been restated as disclosed in Note XX to the financial statements.

Sample Disclosure – Accounting Policy On Intangible Asset, Trademarks (8 November 2009)

Intangible Asset – Trademarks

Trademarks acquired have finite useful lives and are carried at cost less any accumulated amortisation and any accumulated impairment losses.

Amortisation is calculated using the straight-line method to allocate the cost of trademarks over their estimated useful lives of 7 years. Cost of renewing trademarks is recognised in the income statements as incurred.