ISA 240.26 - risk of revenue recognition
Dear All
I am not convinced that anyone is doing the procedures properly to comply with ISA 240.26 - the risk of revenue recognition.
Recognition
Recognition is the process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the following criteria for recognition: [F 4.37 and F 4.38]
Recognition, as defined in the IASB Framework, means incorporating an item that meets the definition of revenue (above) in the income statement when it meets the following criteria:
it is probable that any future economic benefit associated with the item of revenue will flow to the entity, and the amount of revenue can be measured with reliability.
Sale of goods
Revenue arising from the sale of goods should be recognised when all of the following criteria have been satisfied: [IAS 18.14]
the seller has transferred to the buyer the significant risks and rewards of ownership: you need to look at delivery notes/insurance documents/shipping documents.
the seller retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold: this is usually evidenced by: you need to look at delivery notes/insurance documents/shipping documents.
the amount of revenue can be measured reliably: you need to look at delivery notes/insurance documents/shipping documents.
it is probable that the economic benefits associated with the transaction will flow to the seller:
has cash been deposited in the bank account - an invoice does not prove that economic benefits will arise?
and the costs incurred or to be incurred in respect of the transaction can be measured reliably: all purchase documentation inspected: such as invoices agreements contracts etc.
If all of the above in your opinion is above board and real and nothing is fictitious then you have complied with ISA 240.26.
THERE IS NO AGREEMENT TO ACCOUNTING RECORDS - NO SALES ORDERS. JUST THE ABOVE.
AGAIN I IMPLORE YOU TO READ YOUR STANDARDS PROPERLY.
STEVEN FIRER
I am not convinced that anyone is doing the procedures properly to comply with ISA 240.26 - the risk of revenue recognition.
Recognition
Recognition is the process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the following criteria for recognition: [F 4.37 and F 4.38]
Recognition, as defined in the IASB Framework, means incorporating an item that meets the definition of revenue (above) in the income statement when it meets the following criteria:
it is probable that any future economic benefit associated with the item of revenue will flow to the entity, and the amount of revenue can be measured with reliability.
Sale of goods
Revenue arising from the sale of goods should be recognised when all of the following criteria have been satisfied: [IAS 18.14]
the seller has transferred to the buyer the significant risks and rewards of ownership: you need to look at delivery notes/insurance documents/shipping documents.
the seller retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold: this is usually evidenced by: you need to look at delivery notes/insurance documents/shipping documents.
the amount of revenue can be measured reliably: you need to look at delivery notes/insurance documents/shipping documents.
it is probable that the economic benefits associated with the transaction will flow to the seller:
has cash been deposited in the bank account - an invoice does not prove that economic benefits will arise?
and the costs incurred or to be incurred in respect of the transaction can be measured reliably: all purchase documentation inspected: such as invoices agreements contracts etc.
If all of the above in your opinion is above board and real and nothing is fictitious then you have complied with ISA 240.26.
THERE IS NO AGREEMENT TO ACCOUNTING RECORDS - NO SALES ORDERS. JUST THE ABOVE.
AGAIN I IMPLORE YOU TO READ YOUR STANDARDS PROPERLY.
STEVEN FIRER
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