Monday, October 15, 2012

IFRS 7: Financial Instruments- Disclosure: Receivables that are past due but not impaired

IFRS 7 set out certain disclosure requirements relating to financial instrument of the entity. One of the key requirements is: our audit client is require to disclose the analysis of the age of the financial assests that are past due but not impaired.

In general, this relates to trade receivables / other receiables from custoemrs or other third parties. This disclosure allowed financial statement users to have more information relating to the aging profile of the Company, especially those debts that are past due, but not impaired.

A general things to highlight to audit client is to emphasize that the aging table should be prepared based on the due date of the debts, instead of the age of the invoice. Auditor is required to perform testing ot the aging profile, as well as performing high level review on the aging profile prepared by client. This shall be cross checked against the debtors' turnover of the Company.

To illustrate, if our audit client has a debtors' turnover of 90 days, we will then expect the aging profile to have certain debts that are more than 90 / 120 days.

Please feel free to contact us at myauditing@gmail.com if you need more insight on this.

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