6 questions Essay Example | Topics and Well Written Essays - 750 words

6 questions - Essay Example The auditors were in the opinion that these cards needed to be reflected as unrealized sales, as the services had not yet been provided. The audit staff of the PWC affiliated audit firm disagreed with the accounting policy used for recognizing revenue related to LDI calling cards. Accordingly, the staff mentioned in its report that the profit was overstated in the financial statements by Rs280 million. No. It was a common practice worldwide and in Pakistan that the revenues were booked on the basis of sale of prepaid cards and not on their usage, therefore it meant that the audit company was not adhering to the internationally recognized standards. It was unfair to the company for the auditors to effect such sudden changes in the revenue recognition policy without any prior notice to the company management, it was improper and unprofessional. Yes. To challenge the Directives of the regulatory body such as the Security and Exchange Commission of Pakistan (SECP) as the only the commission that had the authority to appoint a new auditor in place of the former auditor removed by the company. The impact of this will be that the company would be able to successfully remove PWC as external auditors by claiming professional negligence that resulted in huge losses to the company shareholders. The company would be able to appoint a new auditor that would comply to international standards regarding the revenue recognition policy. Yes. I agree with the accusations made by the company because first and foremost the PWC audit firm did not take due international standard procedures in effecting the policy change on revenue recognition and further failing to inform the management of the company. Yes. The SECP was responsible for ensuring compliance with regulations by the listed companies. The Institute of Chartered Accountants of Pakistan (ICAP) was the