This is the twenty sixth compilation of opinions issued by the Institute’s Accounting Standards Board (the Board) and the Auditing Standards & Ethics Committee (the Committee) on the enquiries raised by members, entities and regulators during the period from July 2020 to June 2021. This compilation of opinions is termed as “Selected Opinions”.
The Institute, since July 2020, has also started the practice of uploading the selected opinions of the Board or Committee as issued, with the objective to facilitate members and to provide timely guidance. The latest selected opinions issued during the year can be accessed at: www.icap.net.pk/latest-selected-opinions.
The selected opinions are issued for the general guidance of the members of the Institute and these are based on the specific fact patterns shared by the enquirers. In this document, the accounting opinions represent the opinions of the Board and opinions related to auditing and ethical matters represent the opinions of the Committee. These are not the official opinions of the Council of the Institute.
The opinions are based on the financial reporting, auditing and ethics frameworks applicable in Pakistan, on the date the Board or the Committee finalize a particular opinion. Since an opinion is arrived at on the basis of the facts and circumstances of each individual query provided by the enquirer, it may change if the facts and the circumstances change. An opinion may also change due to subsequent developments in law, pronouncements made by the Institute and other relevant changes, including any change in the financial reporting, auditing or ethics framework. The opinions are not a compendium of legal advice.
In every case the members have to make their own decisions in the light of facts and circumstances of the issue, and in consideration of the relevant applicable laws and framework. The Institute, the Board and the Committee will have no liability in connection with the selected opinions.
ACCOUNTING
1.1 Treatment of minimum tax paid on turnover under IAS 12 Income Taxes
1.3 Classification of interest bearing subordinated loan by an NBFC
1.4 Determination and reassessment of discount rate under IFRS 16 Leases
1.5 Clarification on uniformity of accounting policies under IAS 28
1.6 Clarification on the applicability of SECP’s S.R.O 986(I)/2019
1.7 Applicability of IFRS 10 on modaraba management companies and modarabas
1.8 Recognition of deferred tax liability/asset under IAS 12 by a company paying minimum tax
1.9 Measurement of unfunded gratuity scheme under IFRS for SMEs
1.10 Implications of IFRS 16 on aviation industry
1.11 Change in accounting policy by an NBFC to avail the exemption from IFRS 9
1.12 Accounting treatment of SBP’s Temporary Economic Refinance Facility
1.13 Accounting treatment of files of plots in a real estate project/scheme
1.14 Accounting of common control transactions
1.15 Guidance on the implementation of IFRS 14 Regulatory Deferral Accounts
1.16 Accounting of periodic overhauling / maintenance costs of property, plant and equipment
1.17 Classification of interest-free loans repayable at the discretion of the borrowing entity
1.18 Classification of expense in the income and expenditure account of a public sector project
1.19 Classification of a loan under IAS 1 Presentation of Financial Statements
AUDITING
2.1 Enquiry on award of contract for 100% physical verification & reconciliation to statutory joint auditors
2.2 Reconsideration of ICAP technical opinion on appointment of one auditor in place of two retiring auditors
2.3 Advice regarding acceptance of audit engagement
2.4 Signing of audit reports after the expiry of tenure of the auditor