Previously, we focused on the establishing of the starting value of the right to use an asset. We have mentioned the fact that the value of the obligation should be discounted. And how to calculate the discount? What rate of discount to apply?
In the previous parts, we were discussing theoretical aspects related to leasing and the new standard, among others: whom it concerns, what the exemptions are and when the commencement of leasing shall take place. The next issue to be discussed is the establishing of the starting value as well as the amortization rate.
In the previous article devoted to leasing, several sample questions were asked by members of management boards and accountants regarding the recognition, valuation and presentation of leasing under the new IFRS 16 standard. Below please find the answers to the inquiries received.
For several months now, we have been noticing an increased activity among entities in the area of inquiries regarding the issue of leasing, as well as the analysis of contracts they signed for the use of certain assets – be it in the form of a lease, rental or tenancy. The emerging questions have hastened the decision to write several entries about the new IFRS 16 standard.
Perhaps a little out of spite, but personally I would like to draw your attention not so much to whether the cooperation of the auditor with the management or supervisory board of an audited entity should be currently assessed positively or not, but rather what perspective to adopt to assess such cooperation.
The economic reality is not so simple as it is described in academic textbooks, but this is the difference between theory and practice. This is particularly visible in our country, where young graduates of business schools often painfully collide with the business reality. Their enthusiasm is dampened on the occasion of an unassisted attempt at posting, settling taxes, preparing financial statements and performing audit controls. It's just the way it is and it can't be helped − at least until apprenticeship and training programmes based on case studies are implemented in the school system and classes are conducted by practitioners.
Not so long ago I wrote about a certain wrong approach to the valuation of fixed assets (revaluation model). Frequently, in the "revaluation" model, companies measure fixed assets at the fair value and cease to depreciate. Thus, the rules are confused with those that have been established for the valuation of investment properties. This is precisely according to IAS 40 that an entity may measure its investment properties at the fair value and does not need to depreciate. But first things first...
As we financiers and accountants know, the use of IFRS[1] in Poland is not popular (yet); solutions included in the Accounting Act prevail, and with respect to recognising and subsequent depreciation of property, plant and equipment, these are also often solutions derived from the Income Tax Act. But what can we do?
[1] IFRS are the International Accounting Standards, International Financial Reporting Standards and their interpretations issued by the Standards Board in London.
Growing competition and a still strong pressure on prices - How do auditors cope in such a difficult market environment? How do they acquire new customers? How is the specificity of the auditor's work changing? Are there new challenges arising?
