09-29-2003, 05:01 AM
Hi Irfan!
Very interesting situations. Don't mind me being a little probobing but it will help you.
1) Since when net assets only mean total assets less liabilites per generally accpeted accounting principles? That is news to me. Then if some body acquired 95% of another company what will you call 95% of assets less 95% of liabilities. Tell me what term will you use for this amount?
2) Generally accepted auditing principles require that you maintain your indepence. Providing justification to client about treatment of accounting issues is a serious compromise of this principle. I would advise you resign as auditor and you are free to work as staff accountant and provide justification to your boss.
3)IAS 22 does have a section "Identifibile Assets and Liabilities" which envisage partial acquisition of assets. Read it carefully but don't provide a copy to client.
4)Last question is if IAS 22 does not apply in this clear cut case, then which IAS apply. If you say no IAS apply here, then we should go to IASB and tell them "we are facing a situation no body in accounting world has faced before, and please set up a standard for such situations so people are not confused in the future." I hope they don't laugh at us to their hearts' content.
5)This was as comprehensive i could get as possible. No point arguing for arguements sake. If your client is still not convinced, either you accept his argument or qualify the report since you agree that IAS 22 applies in this situation.
Take Care
Very interesting situations. Don't mind me being a little probobing but it will help you.
1) Since when net assets only mean total assets less liabilites per generally accpeted accounting principles? That is news to me. Then if some body acquired 95% of another company what will you call 95% of assets less 95% of liabilities. Tell me what term will you use for this amount?
2) Generally accepted auditing principles require that you maintain your indepence. Providing justification to client about treatment of accounting issues is a serious compromise of this principle. I would advise you resign as auditor and you are free to work as staff accountant and provide justification to your boss.
3)IAS 22 does have a section "Identifibile Assets and Liabilities" which envisage partial acquisition of assets. Read it carefully but don't provide a copy to client.
4)Last question is if IAS 22 does not apply in this clear cut case, then which IAS apply. If you say no IAS apply here, then we should go to IASB and tell them "we are facing a situation no body in accounting world has faced before, and please set up a standard for such situations so people are not confused in the future." I hope they don't laugh at us to their hearts' content.
5)This was as comprehensive i could get as possible. No point arguing for arguements sake. If your client is still not convinced, either you accept his argument or qualify the report since you agree that IAS 22 applies in this situation.
Take Care
