financial
statements
The auditor’s review
Presented by:
Tahmeen Ahmad (ACA)
Purpose of Financial
Statements
• Financial statements are:
“Structured representation of the financial position
and financial performance of an entity.”
• Objective:
To provide information about:
– the financial position,
– financial performance, and
– cash flows
of an entity that is useful to a wide range of users in
making economic decisions.
The Framework
• The International Financial Reporting
Standards (IFRS), in particular guidance
on presentation and disclosure
• Local statutory requirements
– The Companies’ Ordinance, 1984, in particular the
Fourth/ Fifth Schedule for presentation purposes
– Directives of the regulatory bodies
– Industry specific legislation
– Generally accepted accounting principles
Amendments of the
Finance Bill 2007-2008
• The AGM must now be held after three months of the end
of the accounting year. (previously 4 months)
• Power of FG to require additional matters in the auditors’
report now vested in Commission
• NBFCs to comply with minimum equity requirements
rather than minimum capital requirement for incorporation
• Penalty for failure to comply with NBFC laws enhanced
from Rs 5 m to Rs 50 m
• Mandatory for listed Co to have independent share
registrar
• Substantial share holder (12.5%) can apply for re election
of directors in the case of a listed company
Amendments of the Finance
Bill 2007-2008 (Contd.)
• Power of FG to specify business of banking companies
now vests in the SBP
• Perpetual non cumulative preference shares included in
definition of share capital of Banking Company
• Additional conditions for eligibility to pay dividends by
banking company
• Additional provisions for auditors: all significant matters
to be reported to SBP, SBP may revoke the appointment of
auditors
• New Act ‘Payment System for Electronic Fund Transfer
2007’ introduced
• Contract worker now entitled to benefits under the
Companies Profits (worker Participation) Act 1968, and
amount of profit no longer subject to audit adjustments
Responsibility for
Financial Statements
• Final responsibility for fair presentation
of financial statements rests with the
BoD.
• Companies’ Ordinance 1984: directors
to present in the AGM annual accounts
that give a true and fair view of state of
affairs and Profit and loss of the
Company (u/s 233 & 234)
The Auditor’s Responsibility
“To express an opinion on financial statements based
on their audit”
Company information
including financial progress
reports, management structure
etc