Question

Accounting 339 Assignment II Audit PalEx a Palestinian listed company issued its financial statements on the 31 ^ (st) of December 2019. The company does not issue comparative statements. The company Audit report in 2018 was qualified due to material departure from IFRS in accounting for inventory . The company now Accounts for their inventory using FIFO. You are an auditor PalEx asked to review the financial statements. Required: you conduct a review Explain your answer? - Based on your answer what would you advise PalEX do If they accept your advise and you performed all your procedures write the report -

Answer 1

Under IAS 1 Presentation of Financial statement sets out the overall requirements for the presentation of financial statements under IFRS.It requires an entity to present the complete set of financial statement with comparitive amounts of atleast the preceeding year.The entity must not describe its financial statements as complying with the IFRS standards unless it complies with all the requirements of IFRS standard.

Under IAS 2 valuation of inventories under IFRS should be measured at cost or NRV which ever is less and FIFO method is accepted method of determining cost under IFRS.If a company changes its inventory valuation it will constitute a change in accounting policy.Under IFRS changes in accounting policy and correcting errors should be retrospectively accounted for.

The qualified audit report is a modified audit report issued when the financial statement have material mistatement which are not pervasive.To make sure the opinion issued to the client is dealt as it should be the auditor shall check and follow the recommendations and guidelines in standards of auditing.

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