Question

Question # 1

Identify three (3) Accounting Standards that are relevant to the preparation and presentation of a set of consolidated financial statements

Question # 2

How does an integrated computerised accounting system assist management and directors fulfil their responsibilities in respect of the preparation of the financial accounts?

Question # 3 Organisational Policy

a) The organisational policy and procedures relating to financial report preparation is:

b) The purpose of clearly defined written policies and procedures in relation to director’s duties is:

Answer 1

Accounting Standards that are relevant to the preparation and presentation of a set of consolidated financial statements are:

1.IFRS 10- Consolidated Financial Statements

2. FRS 11- Joint Arrangements

3. IFRS 12- Disclosure of Interests in Other Entities

4, IAS 27- Separate Financial Statements

5. IAS 28- Investments in Associates and Joint Ventures

Answer to Q. 2

Integrated computerised accounting system assist management and directors fulfil their responsibilities in respect of the preparation of the financial accounts in the following ways:

1. Invoicing feasibility- On-screen input and printout of sales invoices.
2. Updating of various accounts- Automatic updating of customer accounts in the sales ledger. Automatic updating of suppliers' accounts in the purchases ledger Recording of bank receipts
3. General Ledger update- Automatic updating of the general ledger and automatic adjustment of stock records.
4. Database integration- Integration of a business database with the accounting program
5. Various other important factors such as:

• Aged debtors’ summary – a summary of customer accounts showing overdue amounts
• - Trial balance, trading and profit and loss account and balance sheet
• - Stock valuation
• - Sales analysis
• - Budget analysis and variance analysis
• - GST/VAT returns
• - Payroll analysis

The main advantages of computerized accounting system are:

1. Speed - data entry onto the computer with its formatted screens and built-in databases of customers and supplier details and stock records can be carried out far more quickly than any manual processing.
2. Automatic document production – fast and accurate invoices, credit notes, purchase orders, printing statements and payroll documents are all done automatically.
3. Up-to-date information – the accounting records are automatically updated and so account balances (e.g. customer accounts) will always be up-to-date.
4. Accuracy – there is less room for errors as only one accounting entry is needed for each transaction rather than two (or three) for a manual system.
5. Management information – reports can be produced which will help management monitor and control the business, for example the aged debtors analysis will show which customer accounts are overdue, trial balance, trading and profit and loss account and balance sheet.

Answer to Q. 3

a. The organisational policy and procedures relating to financial report preparation

1. Accuracy of Transactions- All the transactions occurred during the year should be properly accounted under right Heads.
2. Fixed Assets valuation- Fixed Assets should be valued at the system followed and addition and deduction should be incorporated accordingly.
3. Adequate Depreciation and Amortization- Depreciation and amortizations should be provided as per Government norms and proper valuation sheet should be made for the same.
4. Accounting Standards compliance- The management should verify whether all the Accounting standards have been complied properly or not.
5. TAX Calculation and return filing- Income Tax and other Statutory dues dues should be properly accounted and return should be filed on time.
6. Valuation of Current Assets and Current Liabilities- Current assets such as Stock, Debtors, Cash etc and Current liabilities such as Creditors etc should be valued on timely basis.
7. Valuation of Long Term Liabilities- Valuation of Long Term Liabilities such as Loan and Debt calculations should be made properly and of other Long term Liabilities.
8. Interest calculation- Interest expenses should be properly incorporated in to the accounts as per the accounting standards.
9. Proper Provisions and write-offs- Adequate provisions should be made as per the Laws and write offs should be properly authorised.
10. Reporting of Significant accounting policies and changes in the same- Significant Accounting policies should be incorporated in the Financial Reporting and changes to reported properly in the same.

b. The purpose of clearly defined written policies and procedures in relation to director’s duties is:

As a director one must act honestly, in the best interests of the company, and with reasonable care at all times.

One mustn't act, or agree to the company acting, in a manner that's likely to breach the Companies Act, other legislation or your company's constitution.

• Acting in good faith and in the best interests of the company- A director should work in good faith for the Shareholders, Employees, Government and any other person associated with the company. The act and decisions of a Director should be in the best interests of the company.
• Exercising your power as a director for a proper purpose- The directors should exercise his powers in the best interest of the company and for the benefit of the organisation as a whole.
• A director should not allow, agree or cause the business to be carried out in a way likely to create a substantial risk of serious loss to the company's creditors. All the creditors rights should be protected.
• A director should ensure that the company can pay all its debts and has more assets than liabilities
• A director should be responsible for complying with the Companies Act, other legislation or your company's constitution.