LO5: Explanation for audit exception in the FS (first 06 months of 2013)
On 30/9/2013, Lilama No. 5 JSC explained for audit
exception on short-term prepaid expense in the FS of the first 06 months of
2013 as follows:
According to reviewed FS No.
2167/BCKT/TC/NV5, the audit’s exception:
“As mentioned at Note V.06, the Company has not completely transferred
the interest expense incurred during the period to determine the operating
result for the accounting term from 01/01/2013 to 30/06/2013. The total value of
interest expense mentioned in “short-term advance payment” is about VND 2.63
billion”
Explanation:
Because of the specific of
current constructions which are implemented by Lilama No. 5 JSC, most of
constructions have building period more than 01 year; some constructions had
been completed before 30/06/2013 but it has not been accepted by investors. To
ensure that revenue is accordance with the expenses, the Company uses
Accounting Standard No. 16 – Stage No. 8 on borrowing expense as follows:
“Borrowing expense that directly related to the investment in incomplete
construction and production is counted in that assets, etc.”, and according to
Stage No. 5 on incomplete assets as follows: “incomplete assets are assets
which are in the investment process in the incomplete construction or completed
but have not put into production; incomplete products are in process of
industries which have production cycle more than 12 months”.
However, according to auditor’s
opinion, the interest expense mentioned in “short-term advance payment” with
the amount is VND 2.63 billion has to be recorded in the report on operating
result for the accounting term from 01/01/2013 to 30/06/2013. If the Company
transfers the interest expense mentioned above into the Report on operating
result, the profit after tax of the first 06 months of 2013 of Lilama No. 5 JSC
will decrease a respective amount is VND 2.63 billion
We ensure that these incurred
expenses will be distributed in operating expense of the fiscal year 2013
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