Sample Disclosure – Accounting Policy Of Investment Properties (19 January 2011)

Investment Properties

Investment properties are held for long term rental yields or for capital appreciation or both, and are not occupied by companies within the Group.

Investment properties are measured initially at cost. After initial recognition, investment properties are measured and carried at fair value.

Fair value is based on valuation performed by appointed independent registered valuer(s) taking into account factors such as the property growth and market in the surrounding area. The fair value of the investment properties reflects the market conditions at the balance sheet date. Changes in fair values are recorded in the income statement as investment properties fair value adjustment.

On disposal of an investment property, or when it is permanently withdrawn from use and future economic benefits no longer are expected from the property concerned, it shall be derecognised. The difference between the net disposal proceeds and the carrying value is recognised in the income statement in the period of the retirement or disposal.

Transfer to or from investment property will be made when there is a change in use of the property. The commencement of owner-occupation for the property would result in a transfer of the investment property to self-occupied property, included in category of asset named “Property, Plant and Equipment”. On the other hand, the end of owner-occupation of a property would result in  a transfer from the self-occupied property which is included in Property, Plant and Equipment to the category of asset known as “Investment Properties”.

If a self-occupied property became an investment property that will be carried at fair value, the revaluation surplus of the self-occupied property, included in Asset Revaluation Reserve account would be transferred to accumulated profits.

For a transfer from investment property which is carried at fair value to self-occupied property, the fair value of the property at the date of change in use would be treated as deemed cost of the property for subsequent accounting purposes.

For the transfer of investment property to prepaid lease payments, the Group have adopted the transitional provision stated in Para 67A of FRS 117 which allows the Group to retain the unamortised revalued amount of the property as the surrogate carrying amount of prepaid lease payments.

Sample Disclosure – Note On Land Held For Development (16 September 2009)


Land Held For Development 

Land held for development of certain subsidiary companies are charged together with property development costs for banking facilities granted as disclosed in Note XX. 

Sample Disclosure – Auditors’ Report With Disclaimer Of Opinion (15 September 2009)

Independent auditors’ report to the members of ABC Bhd. (Incorporated in Malaysia)

Report on the Financial Statements

We were engaged to audit the financial statements of ABC Bhd., which comprise the balance sheets as at (date/month/year) of the Group and of the Company, and the income statements, statements 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. Because of the matters described in the Basis for disclaimer of opinion paragraphs, we were not able to provide a basis for an audit opinion.


Basis for disclaimer of opinion:

1. As disclosed in Note XX to the financial statements, the proposed disposal of a subsidiary has not been completed to date of this report. The directors made representation that the disposal price has been revised downward from RMXX,XXX,XXX to RMXX,XXX,XXX. The directors assumed that the revised disposal price also represents the fair value of the disposal group of the assets of this subsidiary company and hence resulted in the loss on re-measurement of assets of the disposal group amounted to RMX,XXX,XXX which has been recognized in the income statement. However, we are unable to obtain sufficient appropriate audit evidence to satisfy ourselves as to the revised disposal  price, the faire value of the disposal group of assets, the loss on re-measurement of assets of disposal group, nor the carrying amount of the re-measured assets.

2. The Group and the Company have posted a capital deficiency of RMXXX,XXX,XXX and RMXXX,XXX,XXX respectively as at 30 June 2009. However, the current year financial statements have been prepared based on the assumption that the Group and the Company continue to operated as a going concern which contemplates the realization of assets and meeting the obligations arising therefrom the liabilities of the Group and of the Company in the normal course of business. In addition, the Group and the Company have defaulted the payment of certain loans obtained and the negotiation with the relevant financial institutions on restructuring of the loans is in progress as disclosed in Note XX to the financial statements. These factors have raise concerns and significant doubt as to the ability of the Group and the Company to be able to continue as a going concern.

The financial statements do not include any adjustments relating to the amounts and classification of assets and liabilities that might ne necessary should the Group and the Company unable to continue as a going concern.


Because of the significance of the matters as discussed in the Basis for disclaimer of opinion paragraphs, we do not express an opinion on the financial statements of the Group and the Company for the financial year ended (date/month/year).


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, the accounting and other records and the 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, except in respect of the matters described in the Basis for disclaimer above.

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

(c) We are satisfied that the accounts 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, except in respect of the matters described in the Basis for disclaimer above.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act, except as disclosed in Note XX to the financial statements.


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.

Sample Disclosure – Note On Long Term Receivables (27 August 2009)

Long term receivables







Amount due from subsidiary companies



Amount due from associated companies







The above amounts due from subsidiaries and associated companies are unsecured, interest free and are not repayable within the next twelve months except for amount due from subsidiaries amounting to RM200,000 (2008 – RM100,000) which are subject to interest at 5% (2008 – 5%) per annum.