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Homework answers / question archive / 1 b) Briefly explain the meaning of Provisions as specified by IAS 37 (100-150 words) (3 marks) 2 Section B and Section C - Word MAITHA FADHIL SUWAID RASH References Mailings Review View Help Tell me what you want to do Å Å Aa A 41 A-ay-A AaBbCel AABE AaBbCcDc AaBbc Heading 1 Heading 4 1 Normal Title Paragraph Styles Section B (150 to 300 words) Section C (300 to 500 words) SECTION-B Answer all the Questions 14 x 10 = 40 Marks) 1
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b) Briefly explain the meaning of Provisions as specified by IAS 37 (100-150 words) (3 marks)
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Section B and Section C - Word MAITHA FADHIL SUWAID RASH References Mailings Review View Help Tell me what you want to do Å Å Aa A 41 A-ay-A AaBbCel AABE AaBbCcDc AaBbc Heading 1 Heading 4 1 Normal Title Paragraph Styles Section B (150 to 300 words) Section C (300 to 500 words) SECTION-B Answer all the Questions 14 x 10 = 40 Marks) 1. Explain the concept of Professional Skepticism? How best the professional skepticism helps auditors to perform his role while executing his job as an auditor? Support your discussion with appropriate examples? I
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IAS 37 deals with Provisions, Contingent Liabilities and Contingent Assets
A provision is a liability of uncertain timing or amount.Here Laibilty means present obligation as a result of past events , settlement is expected to result in an outflow of resources (payment).The liability may be a legal obligation or a constructive obligation.Legal obligation that arises from legislation, a contract or other legal act.A constructive obligation arises if past practice creates a valid expectation on the part of a third party.A provision is measured at the amount that the entity would rationally pay to settle the obligation at the end of the reporting period or to transfer it to a third party at that time.recognizing a provision *must be a present obligation as a result of a past event *must be probable outflow of economic benefits to satisfy the obligation *must be reliably estimated amount of economic benefits required to satisfy the obligation
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PROFESSIONAL SKEPTICISM
Meaning:
Professional Skepticism can be considered as a Questioning Attitude. An Auditor needs to be alert during his Audit Procedures. He may face the situation where he has to be alert where possible misstatement can be found due to error or fraud. An error is an unintentional mistake and fraud is an intentional mistake. An Auditor needs to be alert for any kind of error or fraud. An error can be caught easily but it is hard to bring out any fraud.
Thus, Professional Skepticism is a questioning mind that keeps questioning until he is fully satisfied with the all Audit Evidences which are provided to him.
How best professional skepticism helps auditors to perform his role while executing his job as auditor?
- Professional Skepticism ensures higher quality of Audit services
- Questioning may help Auditor to get more and depth knowledge about business procedures of the Auditee. Due to this, an auditor can help to provide an extra ordinary service to the client.
- Professional Skepticism helps the auditor to bring out any frauds by any employee or management of the company.
- Professional Skepticism may take too much time to complete the audit procedure but if not applied it affect the quality of the opinion the auditor provides.
