Need information about how to prepare audit for government grant. Refer to MASB31, we can put grant received in audit report in two (2) types; related to asset or related to income. But my problem is, one audit firm want a grant is separate from account and no need to report in main audit report; mean, audit report for lodgment to SSM is not include grant. For grant, other audit report can prepared, not for lodgment, only for management purpose. So, I want to know whether grant can input in main audit report or must make separation.
Response:
Paragraph 33 of "Framework for the Preparation and Presentation of Financial Statements" states that the information in the financial statements must represent faithfully the transactions and other events it either purports to represent or could reasonably be expected to represent. Hence, thebalance sheet must represent faithfully the transactions and other events incurred by the Company that result assets, liabilities and equity of the entity at the reporting date which meet the recognition criteria.
Based on the information provided in your query, we make an assumption that the Company is adopting Private Entity Reporting Standards. Paragraph 7 ofMASB 31 "Accounting for Government Grants and Disclosure of Government Assistance" requires government grants, regardless monetary or non-monetary grants, to be recognised when the Company could establish there is reasonable assurance that:
a)The Company will comply the conditions attaching to them; and
b)The grants will be received
The government grant shall be recognised as income over the periods to match them with the related costs which they are intended to compensate, on a systematic basis.
In the event that the government grant is related to assets, the government grant shall be presented in the balance sheet either by setting up the grant as deferred income, or deducting the grant in arriving at the carrying amount of the asset.
We hope the above is of assistance to you.
MIA
