1 . Accounting Policy regarding valuation of each significant item of inventory should be disclosed
2 . Accounting treatment for assets created on behalf of others
3 . Ambiguous words (such as ‘as applicable’) in accounting policies should be avoided
4 . An agent should not record ‘Purchases’ and ‘sales’ of a principal in its books of accounts. Only agent’s margin and its related expenses should be recorded
5 . Empty beer bottles can be classified as ‘inventory’ by hotels/ restaurants
6 . For entities incurring continuous losses with significant negative net worth and relief measures are not sufficient and the entity is required to curtail the operations materially then financial statements may not be prepared on going concern basis
7 . In case cash discount is offered to expedite sales collection, booking of cash discount should be done at the time of collection, not at the time of making sales
8 . In power sector, ‘Advance against depreciation’ should be treated as advance to be adjusted against depreciation to be charged in coming years
9 . Merely stating that revenue is recognized in accordance with AS 9 is not appropriate disclosure as required by AS 1
10 . Non-disclosure of accounting policy for revenue recognition of primary business is violation of AS 1
11 . Policy regarding investments involving significant funds and dividend thereon should be considered significant.
12 . Sales and purchases made by agent on behalf of principal should be reflected in its books. Only the agent’s own margin and should be related expenses should be accounted in its books
13 . Transfer of title - Substance over form
14 . Treatment of charging off plant and machinery which are of smaller value - Whether AS 10 and AS 6 are violated
15 . Treatment of disclosure of prior period income/ expenditure based on materiality concept
