01-20-2006, 07:15 AM
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Ali Akbar</i>
Its not only the case with small NGOs/NPOs, many of the small entities are in the same practice.
As far as the non compliance is concerend. Such organizations are voilating the essence of the Framework to the International Accounting Standards, they are non compliant with the requirments of IAS 16. According to the Framework, non compliance with any Standard means that Financial Statemnts are not prepared in line with the prevailing IAS in the country. Strictly speaking treating capital expenditure (fixed assets)as running expenditue is against the matching concept, becoz charging it in the year of purchase to P&L doesnt match with economic benefits expected to arise from it over several years, so thats y assets r depreciated over the years inorder to match the depreciation expense with the economic benefits expected to flow from them to the entity over the years.
Not maintaining proper records of fixed assets results in non compliance with TR 6 of ICAP which is issued pursuant to section 230 of the Companies Ordinance, 1984.
ICAPians, the unparalleled..
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Agreed.
International Financial Reporting Standards (IAS) are explicit.
There is no room within the standard to allow for the expensing of capital expenditure.
In fact IAS 16 is clear - capital expenditure MUST be capitalised in the balance sheet from inception
Its not only the case with small NGOs/NPOs, many of the small entities are in the same practice.
As far as the non compliance is concerend. Such organizations are voilating the essence of the Framework to the International Accounting Standards, they are non compliant with the requirments of IAS 16. According to the Framework, non compliance with any Standard means that Financial Statemnts are not prepared in line with the prevailing IAS in the country. Strictly speaking treating capital expenditure (fixed assets)as running expenditue is against the matching concept, becoz charging it in the year of purchase to P&L doesnt match with economic benefits expected to arise from it over several years, so thats y assets r depreciated over the years inorder to match the depreciation expense with the economic benefits expected to flow from them to the entity over the years.
Not maintaining proper records of fixed assets results in non compliance with TR 6 of ICAP which is issued pursuant to section 230 of the Companies Ordinance, 1984.
ICAPians, the unparalleled..
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Agreed.
International Financial Reporting Standards (IAS) are explicit.
There is no room within the standard to allow for the expensing of capital expenditure.
In fact IAS 16 is clear - capital expenditure MUST be capitalised in the balance sheet from inception
