FRRB Observations | Key Non-compliances Observed in Reporting of Current Assets in the Financial Statements
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- Last Updated on 24 July, 2023
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The Financial Reporting Review Board (FRRB) of ICAI performs an assessment of general-purpose financial statements of different entities to ensure adherence to generally accepted accounting principles (GAAP), compliance with auditor’s reporting obligations, and compliance with disclosure requirements set by regulatory bodies, laws, and applicable regulations. The FRRB was established as a proactive mechanism to enhance financial reporting and auditing practices. These findings will serve as a benchmark to verify whether entities have followed Ind AS guidelines when preparing their financial statements.
a) Inappropriate Reporting
A company has disclosed “Capital Work in Progress Revenue A/c” under Other Current Assets.
b) Relevant Provisions
Para 6 of Ind AS 2, Inventories are assets:
(a) held for sale in the ordinary course of business;
(b) in the process of production for such sale; or
(c) in the form of materials or supplies to be consumed in the production process or in the rendering of services
c) FRRB Observation
“Capital Work in Progress Revenue A/c” relates to stock in progress, and asset in the process of production for sale. The company failed to disclose the same to the “Inventories” as it qualifies under the definition of the inventories.
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