FINANCIAL STATEMENTS

DISCLOSURE CHECK LIST

FOR
MEDIUM-SIZED ENTITIES (MSEs)

The Institute of
Chartered Accountants
of Pakistan
FINANCIAL STATEMENTS DISCLOSURE CHECKLIST FOR MSEs

NAME OF THE ENTITY _____________________________

FINANCIAL STATEMENTS
FOR THE YEAR ______________________________________

NAME OF THE AUDITOR ______________________________

INDEX Page No.

Introduction and Explanatory Comments 1

PART I General

1.0 General Disclosure Information 2

2.0 Fundamental Accounting Assumptions 4
3.0 Significant Accounting Policies 5

PART II Balance Sheet

1.0 Information to be Presented on the face of the Balance sheet 8

2.0 Share Capital 9
3.0 Reserves 9
4.0 Surplus on Revaluation of Fixed Assets 10
5.0 Non-current Liabilities 10
6.0 Current Liabilities 13
7.0 Contingencies 14
8.0 Commitments 15
9.0 Events after the Balance Sheet Date 15
10.0 Fixed Assets (Other than Investments) 15
11.0 Long-Term Investments 17
12.0 Long-Term Loans and Advances 19
13.0 Long-Term Deposits and Prepayments 20
14.0 Current Assets 20
15.0 Inventories 20

PART III Income Statement 22

PART IV Cash Flow Statement 26

PART V Statement of Changes in Equity 27

 INTRODUCTION AND EXPLANATORY COMMENTS

1 This checklist seeks to provide guidance to the reporting companies and their auditors with
regard to the disclosures to be made in the financial statements prepared in accordance with
the Accounting and Financial Reporting Standards for Medium-Sized Entities (MSEs) as
defined in Institute’s circular No. 06/2007 dated November 02, 2007 and the requirements of
the Companies Ordinance, 1984.

2 The checklist is merely a technical practice aid and in no way represents the authoritative
pronouncements of the Institute. It does not aim to interpret the statutory disclosure
requirements set out in the Fifth Schedule and MSE Standards of ICAP.

3 This checklist seeks to represent minimum requirements and does not purport to be all
inclusive and would need review in the light of changes in statutory requirements and
accounting standards from time to time. Users may need to expand or modify the checklist
when further accounting standards are issued or made applicable subsequently.

4 Users of this Checklist are advised to refer directly to applicable statutory provisions and
MSE Standards when appropriate.

5 Use of the Checklist requires the exercise of individual professional judgment and may
require some modification based on the circumstances of individual reporting companies.

6 Respond to each item of the Checklist with a tick (3)in the appropriate column : Yes –
indicating disclosures; No: indicating disclosures not made and N/A showing items not
present or relevant.

7 Items marked “No” should be accompanied by an explanatory memorandum to document in

what manner and to what extent disclosure falls short of the statutory requirement, and MSE
Standards . The explanation should include either the amount or an appropriate percentage
relationship.

8 Each disclosure requirement listed in the Checklist, wherever applicable, is denoted by

relevant clause or reference of the Fifth Schedule (“Part I, II, or III”).

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FINANCIAL STATEMENTS DISCLOSURE CHECKLIST FOR MSEs

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YES NO N/A
PART 1 - GENERAL

1.0 GENERAL DISCLOSURE / INFORMATION

1.1 Has the Entity complied with the following conditions in order to qualify as a Medium-Sized Entity as
defined in ICAP's MSE Standard and Fifth Schedule:

“Medium-Sized Entity” means an Entity that:

a. is not a listed company or a subsidiary of a listed company;

b. has not filed, or is not in the process of filing, its financial statements with the Securities and
Exchange Commission of Pakistan (SECP) or other regulatory organization for the purpose of
issuing any class of instruments in a public market;
c. does not hold assets in a fiduciary capacity for a broad group of outsiders, such as a bank,
insurance company, securities broker/dealer, pension fund, mutual fund or investment banking
entity;
d. is not a public utility or similar company that provides an essential public service;
e. is not economically significant on the basis of criteria defined in Fifth Schedule; and
f. is not a Small-Sized Entity on the basis of criteria defined in Fifth Schedule.

1.2 Is each component of the financial statements clearly identified? MSE 1.12
Has the following information been prominently displayed and repeated when it is necessary for a proper
understanding of the information presented:

a. the name of the reporting entity or other means of identification;

b. the balance sheet date or the period covered by the other financial statements, whichever is
appropriate to the related component of the financial statements; and
c. the reporting currency.

1.3 Has the Entity disclosed the following, if the information is not disclosed elsewhere in the information MSE 1.36
published with the financial statements:

a. the domicile and legal form of the entity, its place of incorporation and the address of the
registered office (or principal place of business, if different from the registered office);

b. a description of the nature of the entity's operations and its principal activities; and

c. the name of the parent and the ultimate parent of the group.

1.4 Do the financial statements include: MSE 1.1

a. balance sheet;
b. an income statement;
c. a statement showing either:
i) all changes in equity; or
ii) changes in equity other than those arising from capital transactions
with equity holders acting in their capacity as equity holders
d. cash flow statement; and
e. accounting policies and explanatory notes.

1.5 Has the statement of compliance given in the notes to the financial statements complied with the
statement given in ICAP Circular 06/2007 dated: November 2, 2007?

1.6 Has the Entity whose financial statements are drawn up in compliance with the standard and the MSE 1.3
Companies Ordinance, 1984, specified in its accounting policy note that these financial statements are in
compliance with Accounting and Financial Reporting Framework for MSEs and the Companies
Ordinance, 1984?

1.7 Has management (in the extremely rare circumstances) concluded that compliance MSE 1.5
with a requirement in approved accounting standards is so misleading that it would conflict
with the objective of financial statements set out in the Framework?

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YES NO N/A

1.8 If answer to 1.7 above is "Yes" has the management departed from the requirement
and disclosed the following in the financial statements:- MSE 1.5

a. that management has concluded that the financial statements fairly

present the Entity’s financial position, financial performance and cash flows;

b. that it has complied in all material respects with an applicable approved

accounting standard except that it has departed from a Standard in order to
achieve a fair presentation;

c. the nature of departure including the treatment that the Standard would require,
the reason why that treatment would be misleading in the circumstances and
the treatment adopted; and

d. for each period presented, the financial impact of the departure on each item in the
financial statements that would have been reported in complying with the requirement.

1.9 Are the Financial Statements presented annually? When, in exceptional circumstances, the MSE 1.13
Entity's balance sheet date changes and annual financial statements are presented for a
period longer or shorter than a year, has the Entity disclosed:-

a. the reason for a period other than one year being used; and
b. that the Income statement; statement of changes in equity and cash flow
statement and related notes are not comparable with amounts for the preceding year.

1.10 Has the Entity disclosed: MSE 14.10

a. the date when the financial statements were approved for issue;
b. who approved the financial statements; and

1.11 Has the Entity reported at each balance sheet date the following: MSE 13.2

a. foreign currency monetary items at the closing rate;

b. non-monetary items that are carried in terms of historical cost denominated in a foreign currency
using the exchange rate at the date of the transaction; and

c. non-monetary items that are carried at fair value denominated in a foreign currency using the
exchange rate at the date when the fair values were determined.

1.12 When the reporting currency ( presentation currency) is different from the currency of the country in MSE 13.6
which the Entity is domiciled (functional currency), has the Entity disclosed the following information:

a. the reason for change in the reporting currency; and

b. the reason for using a different currency.

1.13 Have the following been disclosed by way of notes to the financial statements:- MSE 1.31

a. the information regarding:

i) the basis of preparation of the financial statements
ii) the specific accounting policies selected and applied to significant
transactions and events

b. the information required by approved Accounting Standards that is not presented

elsewhere in the financial statements

c. additional information which is not presented on the face of the financial

statements but that is necessary for a fair presentation

d. the amount of dividends that were declared after the balance sheet date but before the financial
statements were authorised for issue; and

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e. the amount of any cumulative preference dividends not recognised.

1.14 Do the financial statements present fairly the financial position, financial performance and cash flows of MSE 1.2
the Entity?

1.15 Has the appropriate application of the standard, with additional disclosure, resulted (in virtually all MSE 1.2
circumstances) in the financial statements achieving a fair presentation as appropriate for MSEs?

In the event that a transaction undertaken by the Entity, is not covered by the standard, the Entity should MSE 1.2
look to the full set of International Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS) for authoritative guidance, as set out in paragraph 12.1of MSE Standard

1.16 Have the notes to the financial statements been presented in a systematic manner? MSE 1.32

1.17 Has it been ensured that each item on the face of the balance sheet, income statement
and cash flow statement been cross-referenced to any related information in the notes? MSE 1.32

1.18 Has the Entity:

a. disclosed comparative information in respect of the previous period for all numerical information MSE 1.11
in the financial statements, unless a Standard permits or requires otherwise.

b. included comparative information for narrative and descriptive information when it is relevant to
an understanding of the current period’s financial statements?

1.19 When the presentation or classification of items in the financial statements is amended and comparative MSE 1.11
amounts are reclassified (unless the reclassification is impracticable), has the entity disclosed the
following information:

a. the nature of the reclassification;

b. the amount of each item or class of items that is reclassified; and
c. the reason for the reclassification.

1.20 When it is impracticable to reclassify comparative amounts, has the Entity disclosed the MSE 1.11
reason for not reclassifying the amount and the nature of the adjustment?

2.0 FUNDAMENTAL ACCOUNTING ASSUMPTIONS

2.1 Going concern

a. Are the financial statements prepared on a going concern basis after the management MSE 1.6
has made an assessment of the Entity's ability to continue as a going concern?

If answer to (a) above is NO, give the answer to the following questions (b) to (d):

b. Does the management intend to liquidate the Entity or to cease trading

or has no realistic alternative but to do so?

c. When the management is aware, in making its assessment of the Entity's ability to
continue as a going concern, of material uncertainties related to events
or conditions which may cast significant doubt upon the Entity's
ability to continue as a going concern, have those uncertainties been disclosed?

d. when the financial statements are not prepared on a going concern

basis, has the following information been disclosed:-

i) the fact that the financial statements have not been prepared on a going concern basis;
ii) the basis on which the financial statements have been prepared;
iii) the reason why the Entity has not been considered to be a going concern.

Accrual Basis of Accounting

2.2 Has the Entity disclosed the fact that its financial statements, except for cashflow information,
been prepared under the accrual basis of accounting? MSE 1.7

Consistency of Presentation

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YES NO N/A
2.3 Has the Entity retained consistency in the financial statements from one period to the next: MSE 1.8
a. the presentation of items; and
b. the classification of items.

2.4 Has the presentation and classification of items in the financial statements MSE 1.8
been retained from last period to the present one: If NO, is it due to:

a. a significant change in the nature of the operations of the Entity or a

review of its financial statement presentation demonstrates that the
change will result in a more appropriate presentation of events or
transactions; or

b. a change in presentation is required by an approved Accounting Standard

Materiality and Aggregation

2.5 Has each material class of similar items been presented separately in the financial statements? MSE 1.9

3.0 SIGNIFICANT ACCOUNTING POLICIES

3.1 Has the accounting policy section of the notes to the financial statements disclosed a Suggestive
description of all significant accounting policies of the reporting entity presented in
a clear and concise manner at one place?

3.2 Has the entity disclosed the following in the accounting policies section of the notes to the financial
statements :
a. the measurement basis (or bases) used in preparing the financial statements and;
b. each specific accounting policy used that is necessary for a proper understanding of the financia MSE 1.33
statements.

3.3 Has the Entity disclosed in the notes, information about the key assumptions concerning the future, and MSE 1.34
other key sources of estimation uncertainty at the balance sheet date having a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year? In
respect of those assets and liabilities have the notes included details of:

a. their nature; and

b. their carrying amount as at the balance sheet date.

3.4 The accounting policies that a Entity might consider presenting include, but are not
restricted to, the following (other standards specifically require disclosure of accounting
policies in many of these areas):

a. revenue recognition; MSE 9.11a

b. consolidation principles, including subsidiaries and associates; Suggestive

guidance(from b - p)
c. property, plant & equipment;

d. Intangible assets;

e. financial instruments and investments;

f. leases;

g. inventories;

h. taxes, including deferred taxes;

i. provisions;

j. employee benefit costs;

k. foreign currency translation and hedging;

l. definition of cash and cash equivalents;

m. method used for investment in associates;

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n. valuation of inventories;

o. borrowing costs;

p. Govt. grants

3.5 Change in Accounting Policies

3.5.1 Has the Entity changed its accounting policy? Yes or No?

3.5.2 If Yes is the change in accounting policy: MSE 12.3

a. required by a Standard ; or
b. it results in the financial statements providing reliable and more relevant
information about the effects of transactions or other events
on the Entity’s financial position, financial performance or cash flows.

3.5.3 Has the Entity selected and applied its accounting policies for a period consistently for similar MSE 12.2
transactions, other events and circumstances? If this section requires or permits such
categorisation, has the appropriate accounting policy been selected and applied consistently to
each category?

3.5.4 Where application of a change in the Standard has a material effect on the current period or any MSE 12.6
prior period presented, has the Entity disclosed the following:

a. the fact that the change in accounting policy is made in accordance with the change in
the Standard, with a description of those provisions;

b. the amount of the adjustment for the current period and for each prior period
presented;

c. the amount of the adjustment relating to periods prior to those included in the
comparative information; and

d. the fact that comparative information has been restated, or that restatement for a
particular prior period has not been made because it would require undue cost and
effort.

3.5.5 Has the change in accounting policy been applied retrospectively? MSE 12.7

3.5.6 Have the opening balance of retained earnings for the earliest prior period presented and the
other comparative amounts disclosed for each prior period presented been adjusted, where
applicable, as if the new accounting policy was always in use?

3.5.7 When comparative information for a particular prior period is not restated, has the new MSE 12.8
accounting policy been applied to the balances of assets and liabilities at the beginning of the
next period, and a corresponding adjustment made to the opening balance of retained earnings
for the next period?

3.5.8 When a change in an accounting policy has an effect on the current period or any prior period MSE 12.9
presented, or may have an affect in subsequent periods, has the Entity disclosed the following:

a. the reasons for the change;

b. the amount of the adjustment for the current period and for each prior period
presented;

c. the amount of the adjustment relating to periods prior to those presented; and

d. that comparative information has been restated, or that restatement for a particular
prior period has not been made because it would require undue cost or effort?

3.6 Errors

3.6.1 Has the Entity corrected material prior period errors retrospectively in the first set of financial MSE 12.13
statements authorised for issue after their discovery:

a. by restating the comparative amounts for the prior period(s) in which the

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YES NO N/A
error occurred; or
b. if the error occurred before the earliest prior period presented, by
restating the opening balances of assets, liabilities and equity for that
period?

3.6.2 Has the prior period error been corrected by retrospective restatement except to the extent that it MSE 12.14
is impracticable to determine either the period-specific effects or the cumulative effect of the
error?

3.6.3 Has the Entity disclosed the following:

a. the nature of the prior period error;

b. the amount of the correction for each prior period presented? MSE 12.15

3.7 Changes in Accounting Estimates

3.7.1 Has the effect of a change in an accounting estimate been recognised prospectively by including MSE 12.10
it in profit or loss in:

a. the period of the change, if the change affects that period only; or
b. the period of the change and future periods, if the change affects both.

3.7.2 To the extent that a change in an accounting estimate gives rise to changes in
assets and liabilities, or an item of equity, has it been recognised by adjusting
the carrying amount of the related asset, liability or equity item in the period of
the change? MSE 12.11

3.7.3 Has the following information been disclosed for a change in accounting estimates

that has an effect in the current period or expected to have an effect in future periods:

a. the nature of the change; and

b. the amount of the change unless considered impractical to quantify the amount MSE 12.12

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YES NO N/A

PART II - BALANCE SHEET

1.0 INFORMATION TO BE PRESENTED ON THE FACE OF THE BALANCE SHEET

1.1 As a minimum, has the face of the balance sheet included line items which present the MSE 1.19
following amounts:

a. property, plant and equipment;

b. intangible assets;

c. investments;

d. inventories;

e. trade and other receivables;

f. cash and cash equivalents;

g. trade and other payables;

h. tax liabilities and assets;

i. provisions;

j. non-current interest-bearing liabilities; and

k. capital and reserves.

1.2 If the Entity not separately present current and non-current assets, and current and non-current MSE 1.14
liabilities on the face of its balance sheet, has it present all assets and liabilities broadly in
order of liquidity?

1.3 If the Entity present separately current and non-current assets, and current
and non-current liabilities on the face of its balance sheet, has the Entity classified:

a. an asset as current when it: MSE 1.16

– is expected to be realised in, or is intended for sale or consumption in,
the Entity’s normal operating cycle;
– is held primarily for the purpose of being traded;
– is expected to be realised within twelve months of the balance sheet
date; or
– is cash or a cash equivalent asset unless it is restricted from being
exchanged or used to settle a liability for at least twelve months after
the balance sheet date.

Are all other assets classified as non-current, including intangible assets? MSE 1.16

Has the Entity classified:

b. a liability as current when it: MSE 1.17
– is expected to be settled in the Entity’s normal operating cycle;
– is held primarily for the purpose of being traded;
– is due to be settled within twelve months after the balance sheet date; or
– is not attached to an unconditional right to defer settlement of the
liability for at least twelve months after the balance sheet date.

Are all other liabilities classified as non-current? MSE 1.17

1.4 Has the Entity classified its financial liabilities as current, when they are due to be settled within
twelve months after the balance sheet date, even if: MSE 1.18

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– the original term was for a period longer than twelve months; and
– an agreement to refinance, or to reschedule payments, on a long-term
basis is completed after the balance sheet date and before the financial
statements are authorised for issue.

1.5 Have additional line items, headings and subtotals been presented on the face of the
balance sheet when such presentation is necessary to present fairly the Entity’s financial position? MSE 1.20

1.6 Has the Entity classified government grants related to assets (including non-monetary MSE 7.6
grants at fair value) either:
a. as deferred income; or
b. as a deduction in arriving at the carrying amount of the asset.

1.7 Are assets and liabilities presented separately and not offset ? MSE 1.10
Offsetting may also take place where gains, losses and related expenses arising from the same or
similar transactions are not material.

1.8 Whichever method of presentation is adopted, has the Entity disclosed for MSE 1.15
each asset and liability item that combines amounts expected to be
recovered or settled both before and after twelve months from the balance
sheet date, the amount expected to be recovered or settled after more than twelve months?

2.0 SHARE CAPITAL

2.1 Is the Share capital classified under the following sub-heads, namely: Sch II.6(i)

2.1.1 Issued, subscribed and paid up capital, distinguishing in respect of each

class between:-

a. shares allotted for consideration paid in each;

b. shares allotted for consideration other than cash, showing separately

shares issued against property and others (to be specified); and

c. shares allotted as bonus shares?

2.2 For each class of share capital , have the following been disclosed either on the face of the balance MSE 1.21(a)
sheet or in the notes:

a. the number of shares authorized;

b. the number of shares issued and fully paid, and issued but not fully paid;

c. par value per share, or that the shares have no par value;

d. a reconciliation of number of shares outstanding at beginning and end of the

year;

e. the rights, preferences and restrictions attaching to each class of share

capital including restrictions on the distribution of dividends and the
repayment of capital;

f. shares in the Entity held by the Entity itself ; and

g. shares reserved for issuance under options and sales contracts, including
the terms and amounts?

3.0 RESERVES

3.1 Are the reserves, distinguished between capital reserves and revenue reserves? Sch II.6(ii)

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3.2 Has the Entity disclosed a description of the nature and purpose of each
reserve within owners' equity? MSE 1.21(b)

4.0 SURPLUS ON REVALUATION OF FIXED ASSETS

4.1 Have fixed assets been revalued? Sch II.7

4.2 Have the revaluations been made with sufficient regularity to ensure that the carrying amount does not MSE 3.15
differ materially from fair value at the balance sheet date?

4.3 When there is no evidence of market value because of the specialised nature of the plant and equipment MSE 3.17
and because these items are rarely sold, except as part of a continuing business, has the Entity valued
them at their depreciated replacement cost?

4.4 When an item of property, plant and equipment is revalued, has any accumulated depreciation at the MSE 3.18
date of the revaluation is either:

a. Restated proportionately with the change in the gross carrying amount of the asset so that the
carrying amount of the asset after revaluation equals its revalued amount (this method is often
used when an asset is revalued by means of an index to its depreciated replacement cost); or

b. Eliminated against the gross carrying amount of the asset and the net amount restated to the
revalued amount of the asset. For example, this method is used for buildings that are revalued to
their market value.

4.5 Does the amount of the adjustment arising on the restatement or elimination of accumulated depreciation MSE 3.18
form part of the increase or decrease in carrying amount?

4.6 When an item of property, plant and equipment is revalued, has the entire class of property, plant and MSE 3.19
equipment to which that asset belongs been revalued?

4.7 Has the Entity credited the increase directly to 'Surplus on Revaluation of Fixed assets accounts and Sch II. 7
disclosed in the balance-sheet of the Entity after Capital and Reserves as specified in section 235 of the CO84 Sec. 235
Companies Ordinance, 1984 (XLVII of 1984) and SRO 45(I)/2003 dated January 13, 2003? MSE 3.20

4.8 If an asset’s carrying amount is decreased as a result of a revaluation, has the decrease been CO84 Sec.
recognised in profit or loss account? 235
MSE 3.22

4.9 Is an amount of incremental depreciation for the period transferred from ‘Surplus on Revaluation of Fixed MSE 3.24
Assets Account’ to unappropriated profit / accumulated loss through ‘Statement of Changes in Equity’ to
record realisation of surplus?

5.0 NON-CURRENT LIABILITIES

5.1.1 In the case of a entity which is not a Small-sized Entity , has the Entity classified its non-current Sch II. 8(A)
liabilities under appropriate sub-heads as:

(i) long term financing;

(ii) debentures;
(iii) liabilities against assets subject to finance lease;
(iv) long term murabaha;
(v) long term deposits; and
(vi) deferred liabilities.

5.1.2 In the case of a Entity which is not a Small-sized Entity, have the long term Sch II. 8(B)
loans been classified as secured and unsecured, showing separately under each class:

(i) loans from banking companies and other financial institutions, other
than those as specified in clause (ii) below;

(ii) loans from related parties; and

(iii) other loans.

5.1.3 Have long-term deposits been classified according to their nature? Sch II. 8(C)

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YES NO N/A

5.2 Leases Disclosures by Lessee

Finance Lease

5.2.1 Have the following disclosures been made for finance leases : MSE 4.9

a. for each class of asset, the net carrying amount at the balance sheet date;

b. a reconciliation between the total of future minimum lease payments at the

balance sheet date, and their present value. In addition, a Entity
should disclose the total of future minimum lease payments at the balance
sheet date, and their present value, for each of the following periods:

i) not later than one year?

ii) later than one year and not later than five years?

iii) later than five years?

c. contingent rents recognized as an expense for the period?

Lease Payments under Operating Leases

5.2.2 Has the Entity (the lessee ) disclosed the total of future minimum lease payments under non MSE 4.12
cancelable operating leases for each of the following periods:

i) not later than one year;

ii) later than one year and not later than five years;

iii) later than five years;

Sale and leaseback transactions

Finance Lease
5.2.3 If a sale and leaseback transaction results in a finance lease, has any excess of sales proceeds MSE 4.14
over the carrying amount been deferred and amortised over the lease term and not immediately
recognised as income in the financial statements of a seller-lessee?

Operating Lease
5.2.4 If a sale and leaseback transaction results in an operating lease and it is clear that the MSE 4.15
transaction is established at fair value, has any profit or loss recognised immediately?

5.2.5 If the sale price is below fair value, has any profit or loss been recognised immediately except MSE 4.15
that, if the loss is compensated by future lease payments at below market price, it would be
deferred and amortised in proportion to the lease payments over the period for which the asset
is expected to be used?

5.2.6 If the sale price is above fair value, has the excess over fair value been deferred and amortised MSE 4.15
over the period for which the asset is expected to be used?

5.2.7 Has a loss equal to the amount of the difference between the carrying amount and fair value MSE 4.16
been recognised immediately, if the fair value at the time of a sale and leaseback transaction is
less than the carrying amount of the asset?

5.3 Deferred Liabilities and Employee Benefits

Post–employment Benefits: Defined Contribution Plans

5.3.1 In respect of retirement benefits in the form of provident fund and other defined contribution MSE 17.6
schemes:

a. has the contribution payable by the employer for a year been charged to profit or loss
for the year?

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b has any shortfall of the contribution paid compared to the amount payable for the year
also been charged to profit or loss for the year?

c. if contribution paid is in excess of the amount payable for the year, has the excess
been treated as a prepayment?

5.3.2 When an employee has rendered service during a period, has the Entity recognised the MSE 17.7
contribution payable to a defined contribution plan in exchange for that service:

a. as a liability (accrued expense), after deducting any contribution already paid. If the contribution
already paid exceeds the contribution due for service before the balance sheet date, has the
excess been recognised as an asset (prepaid expense) ; and

b. as an expense, unless another section requires or permits the inclusion of the contribution in the
cost of an asset.

Post–employment Benefits: Defined Benefit Plans

5.3.2 In respect of gratuity benefit and other defined benefit schemes, has the accounting treatment MSE 17.8
depended on the type of arrangement which the employer chosen:

a. If the payment for retirement benefits is made out of its own funds, has an appropriate charge to
the statement of profit and loss for the year been made through a provision for the accruing
liability and it is calculated according to actuarial valuation?

b. Liability for retirement benefits is funded through creation of a trust:

i. Has the cost incurred for the year been determined actuarially? Has actuarial valuation been
conducted at least once in every three years?

ii. If the actuarial valuations are not conducted annually, has the actuary’s report specified the
contributions to be made by the employer on an annual basis during the inter valuation period?

iii. Has the annual contribution (which is in addition to the contribution that may be required to
finance unfunded past service cost) reflected proper accrual of retirement benefit cost for each
of the years during the inter valuation period and been charged to the statement of profit and
loss for each such year?

iv. Where the contribution paid during a year is lower than the amount required to be contributed
during the year to meet the accrued liability as certified by the actuary, has the shortfall been
charged to the statement of profit and loss for the year?

v. Where the contribution paid during the year is in excess of the amount required to be
contributed, as certified by the actuary, has the excess been treated as a prepayment?

c. Liability for retirement benefits is funded through a scheme administered by an insurer:

i. Has an actuarial certificate or a confirmation from the insurer been obtained?

ii. Where the contribution paid during a year is lower than the amount required to be contributed
during the year to meet the accrued liability as certified by the actuary, has the shortfall been
charged to the statement of profit and loss for the year?

iii. In case of excess contribution of the amount, has the excess been treated as a prepayment?

5.3.3 Where actuarial valuation is conducted, has it been in accordance with requirements of IAS 19 – MSE 17.9
Employee Benefits?

5.3.4 When a retirement benefit scheme is amended with the result that additional benefits are MSE 17.11
provided to retired employees, has the cost of the additional benefits been accounted for in
accordance with MSE 17.8?

5.3.5 Have the financial statements disclosed the method by which retirement benefit costs for the MSE 17.12
period have been determined?

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 Para # DISCLOSURE MADE

YES NO N/A
5.3.6 In case the costs related to gratuity and other defined benefit schemes are based on an actuarial MSE 17.12
valuation, has the financial statements disclosed whether the actuarial valuation was made at
the end of period or at an earlier date? has the date of the actuarial valuation been specified and
the method by which the accrual for the period determined if the same is not based on the report
of the actuary?

5.4 Deferred Taxation

5.4.1 Are deferred tax assets and liabilities, if recognised, distinguished from current tax assets and MSE 11.11
liabilities?

5.4.2 Has the Entity offset deferred tax assets and deferred tax liabilities if, and only if, it: MSE 11.13
a. has a legally enforceable right to set off the recognised amounts; and

b. intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.

5.4.3 Has the Entity disclosed the amount of a deferred tax asset and the nature of the evidence
supporting its recognition, when: MSE 11.15

a. the utilization of the deferred tax asset is dependent on future taxable profits
in excess of the profits arising from the reversal of existing taxable temporary
differences? and

b. the Entity has suffered a loss in either the current or preceding period
in the tax jurisdiction to which the deferred tax asset relates?

5.4.4 Has the Entity disclosed the amount (and expiry date, if any) of deductible temporary MSE 11.16
differences, unused tax losses, and unused tax credits for which no deferred tax asset is
recognised in the balance sheet?

5.5 Taxation

5.5.1 Have tax assets and tax liabilities been presented separately from other assets and liabilities in MSE 11.11
the balance sheet?

5.5.2 Has the Entity offseted current tax assets and current tax liabilities? MSE 11.13

5.5.3 Entity can offset if and only if it: MSE 11.13

a. has a legally enforceable right to set off the recognised amounts; and

b. intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.

6.0 CURRENT LIABILITIES

6.1 Have the current liabilities and provisions been classified under the following sub-heads, Sch II. 9

so far as these are appropriate to the Entity's business:

6.1.1 Trade and other payables, classified as:

(a) creditors;
(b) murabaha;
(c) accrued liabilities;
(d) advance payments;
(e) payable to employee retirement benefit funds;
(f) unpaid and unclaimed dividend; and
(g) others ( to be specified, if material)

6.1.2 Interest, profit, return or mark-up accrued on loans and other payables;

6.1.3 Short term borrowings classified as:

a. short-term borrowings, distinguishing between secured and unsecured
and between loans taken from:
i. banking companies and other financial institutions other than related
parties;

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 Para # DISCLOSURE MADE

YES NO N/A
ii. related parties; and
iii. others;

b. short-term running finance, distinguishing between secured and unsecured;

iv. current portion of long term borrowings;

v. current portion of long term murabaha; and
vi. provision for taxation, showing separately income tax and other taxes.

Provisions

6.2 Has the Entity disclosed whether the amount been discounted? MSE 8.9

6.3 For each class of provision, has the Entity disclosed: MSE 8.25

a. the carrying amount at the beginning and end of the period?

b. a brief description of the nature of the obligation and the expected timing of any resulting
outflows of economic benefits?

c. additional provisions made in the period, including increases to existing provisions?

d. amount used (i.e. incurred and charged against the provision) during the period?

e. unused amounts reversed during the period?

f. the increase during the period in the discounted amount arising from the passage of
time and the effect of any change in the discount rate?

g. a brief description of the nature of the obligation and the expected timing of any resulting
outflows of economic benefits including an indication of the uncertainties about the amount or
timing of those outflows. Where necessary to provide adequate information, an entity shall
disclose the major assumptions made concerning future events.

Short Term Employee Benefits

6.4 When an employee rendered service to the Entity during an accounting period, has it recognised the MSE 17.2
undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:

a. as a liability (accrued expense), after deducting any amount already paid.

b. as an expense.

6.5 Has the cost of short-term employee benefits in the form of compensated absences been recognised as MSE 17.3
follows:
a. in the case of accumulating compensated absences, when the employees render service that
increases their entitlement to future compensated absences; and
b. in the case of non-accumulating compensated absences, when the absences occur.

7.0 CONTINGENCIES

7.1 In case of a Entity which is not a Small-sized Entity, whether a footnote to the balance sheet has been
added, showing separately, -

7.1.1 aggregate amount of any guarantees given by the Entity on behalf of any Sch II . 10(i)
related party and where practicable, the general nature of the guarantee;

7.2 Has the Entity disclosed a contingent liability, as required by MSE 8.26? MSE 8.5

7.3 Has the Entity disclosed a contingent asset as required by paragraph 8.27 of MSE Standard? MSE 8.8

The Institute of Chartered Accountants of Pakistan 14

 Para # DISCLOSURE MADE

YES NO N/A
7.4 Unless the possibility of any outflow in settlement is remote, has the Entity disclosed for each class of MSE 8.26
contingent liability at the balance sheet date a brief description of the nature of the contingent liability
and, an estimate of its financial effect, measured under paragraphs 8.9 and 8.10 of MSE Standard?
Further has the Entity disclosed an indication of the uncertainties relating to the amount or timing of any
outflow and the possibility of any reimbursement?

7.5 Where an inflow of economic benefits is probable, has the Entity disclosed a brief description of the MSE 8.27
nature of the contingent assets at the balance sheet date and an estimate of their financial effect,
measured using the principles set out for provisions in paragraphs 8.9 and 8.10?

7.6 Where any of the information required by paragraphs 8.26 and 8.27 is not disclosed because it is not MSE 8.28
practicable, has that fact been stated?

7.7 In extremely rare cases, disclosure of some or all of the information required by 8.25 - 8.27 above MSE 8.29
can be expected to prejudice seriously the position of the Entity in a dispute with other
parties on the subject matter of the provision, contingent liability or contingent asset. In such
cases, has the Entity disclosed the general nature of the dispute, together with the fact ,
and reason why, the information has not been disclosed?

8.0 COMMITMENTS

8.1 Has a footnote to the balance sheet been added, showing separately :

a. where practicable the aggregate amount or estimated amount, if it is material, Sch II . 10(ii)
of contracts for capital expenditure, so far as not provided for or a statement
that such an estimate can not be made;

b. any other commitments, if the amount is material indicating the general nature of Sch II . 10(iii)
commitment.

9.0 EVENTS AFTER THE BALANCE SHEET DATE

9.1 Has the Entity adjusted the amounts recognised in its financial statements to reflect adjusting events MSE 14.1
after the balance sheet date?

9.2 Has the Entity recognised non-adjusting events after the balance sheet date in its financial statements ? MSE 14.4

9.3 Has the Entity updated disclosure in respect of the information received after the
balance sheet date about conditions that existed at the balance sheet date? MSE 14.6

9.4 Has the Entity disclosed the following information for each significant category of MSE 14.7
non-adjusting event after the balance sheet date:

a. the nature of event?

b. an estimate of the financial effect, or a statement that such an estimate cannot be made?

9.5 Has the Entity recognised dividends as a liability at the balance sheet date if dividends are proposed or MSE 14.9
declared after the balance sheet date?

10.0 FIXED ASSETS (OTHER THAN INVESTMENTS)

10.1 Property, Plant & Equipment

10.1.1 Have the fixed assets, other than investments, been classified under appropriate
sub-heads; duly itemised such as:- Sch II.1

(i) Property, plant and equipment:

(a) land (distinguishing between free-hold and leasehold);

(b) buildings (distinguishing between buildings on free-hold land and

The Institute of Chartered Accountants of Pakistan 15

 Para # DISCLOSURE MADE

YES NO N/A
those on leasehold land);
(c) plant and machinery;
(d) furniture and fittings;
(e) vehicles;
(f) office equipment;
(g) capital work in progress indicating significant item wise details;
(h) development of property; and
(i) others (to be specified).

(ii) Intangible:

(a) goodwill;
(b) brands names;
(c) computer software;
(d) licences and franchises;
(e) patents, copyright, trade marks and designs;
(f) others (to be specified)

10.1.2 Have the financial statements disclosed, for each class of property, plant and equipment, the MSE 3.38
following:

a) the measurement basis used for determining the gross carrying amount (when more
than one basis has been used, the gross carrying amount for that basis in each
category shall be disclosed);

b) the depreciation methods used;

c) the useful lives or the depreciation rates used;

d) the gross carrying amount and the accumulated depreciation at the beginning
and end of the period, (aggregated with accumulated impairment losses)

e) a reconciliation of the carrying amount at the beginning and end of the period showing:

i) additions;

ii) disposals;

iv) increases or decreases during the period resulting from revaluations ;

v) impairment losses recognized in income statement during the period (if any);

vi) impairment losses reversed in income statement during the period (if any);

vii) depreciation;

ix) other movements.

10.1.3 Has the existence and amounts of restrictions on title as well as property, plant and equipment MSE 3.39
pledged as security for liabilities been disclsoed in the financial statements?

10.1.4 When items of property, plant and equipment are stated at revalued amounts, has the following
been disclosed: MSE 3.40

a. the basis used to revalue the assets;

b. the effective date of the revaluation;

c. whether an independent valuer was involved?

10.2 Assets subject to finance lease

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 Para # DISCLOSURE MADE

YES NO N/A

10.2.1 Has the Entity disclosed the net carrying amount of each class of asset subject to MSE 4.9(a)
finance lease as at the balance sheet date?

10.3 Government Grants

10.3.1 Has the following been discloed: MSE 7.14

a. the accounting policy adopted for government grants;

b. the methods of presentation adopted in the financial statements;

c. disclosure of the nature and extent of the government grants recognized in

the financial statements, and an indication of other forms of
government assistance from which the Entity has directly benefited;

d. unfulfilled conditions and other contingencies attaching to government

assistance that have been recognized.

10.4 Intangible Assets

10.4.1 Has the Entity disclosed the following in the financial statements for each class of intangible MSE 5.26
assets, distinguishing between internally generated intangible assets and other intangible
assets:

a. whether the useful lives are indefinite or finite and, if finite, the useful lives or the
amortisation rates used;

b. the amortisation methods used for intangible assets with finite useful lives;

c. the gross carrying amount and the accumulated amortisation (aggregated with
accumulated impairment losses) at the beginning and end of the period;

d. the line item(s) of the income statement in which the amortisation of intangible assets
is included; and

e. a reconciliation of the carrying amount at the beginning and end of the period showing:

(i) retirements and disposals;

(ii) impairment losses recognised;
(iii) impairment losses reversed;
(iv) amortisation recognised during the period; and
(v) additions and other changes in the carrying amount during the period.

Comparative information is not required.

10.4.2 Has the following been disclsoed in the financial statements: MSE 5.27

a. for an intangible asset assessed as having an indefinite useful life, the carrying amount
of that asset and the reasons supporting the assessment of an indefinite useful life. In
giving these reasons, also describe the factor(s) that played a significant role in
determining that the asset has an indefinite useful life.

b. a description, the carrying amount and remaining amortisation period of any individual
intangible asset that is material to the entity’s financial statements.

c. for intangible assets acquired by way of a government grant and initially recognised at
fair value:

(i) the fair value initially recognised for these assets;

(ii) their carrying amount; and

(iii) whether they are measured after recognition under the cost model or the
revaluation model.

The Institute of Chartered Accountants of Pakistan 17

 Para # DISCLOSURE MADE

YES NO N/A

d. the existence and carrying amounts of intangible assets whose title is restricted and
the carrying amounts of intangible assets pledged as security for liabilities.

e. the amount of contractual commitments for the acquisition of intangible assets.

10.5 Borrowing Cost

10.5.1 Has the following been disclosed in the financial statements : MSE 10.13

a. the accounting policy adopted for borrowing costs;

b. the amount of borrowing costs capitalised during the period; and

c. the capitalisation rate used to determine the amount of borrowing costs eligible for
capitalisation?

11.0 LONG-TERM INVESTMENTS

11.1 Have aggregate amounts in respect of the following been shown under separate sub-heads:- Sch II.2(A)

i. investments in related parties;

ii. other investments.

11.2 An Entity which is not a Small-Sized Entity, has the following been disclosed for the purposes of clauses Sch II.2(B)
(i) and (ii) of 12.1 above:

a. held to maturity investments, which are not due to mature within next twelve months;
b. d
available for sale investments, which are not intended to be sold within next twelve
months, and
c. market value of listed securities and book value of unlisted securities as per their latest
available financial statements.

11.3 Are investments classified into: MSE 16.1

a. financial assets at fair value through profit or loss;

b. held to maturity investments;
c. available for sale

11.4 Gains and Losses

11.4.1 Has the gain /loss been recognised in profit or loss, in case of an investment classified as at fair MSE 16.9(a)
value through profit or loss?

11.4.2 For available-for-sale financial assets, has the following been disclosed: MSE 16.9(b)
a. the amount of any gain or loss that was recognised in equity through the
statement of changes in equity; and

b. in case the investment is derecognised, is the cumulative gain or loss previously

recognised in equity, now reported in net profit or loss for the period.

11.4.3 For investments carried at amortised cost, has a gain or loss been recognised in profit or loss MSE 16.10
when an investment is derecognised or impaired, and through the amortisation process?

11.5 Reclassification

11.5.1 Has the Entity reclassifid an investment into or out of the fair value through profit or loss MSE 16.4
category while it is held or issued?

11.5.2 If it is no longer appropriate to classify an investment as held–to-maturity,has it been reclassified MSE 16.5
as available for sale and remeasured at fair value?

11.5.3 Has the difference between carrying amount and fair value been accounted for in accordance MSE 16.5
with para 12.4.2 above?

The Institute of Chartered Accountants of Pakistan 18

 Para # DISCLOSURE MADE

YES NO N/A
11.5.4 If a reliable measure is available the investment is required to be measured at fair value, has the MSE 16.7
investment been remeasured at fair value, and the difference between its carrying amount and
fair value accounted for in accordance with paragraph 12.4.1 and 12.4.2?

If, as a result of a change in intention or ability or in the rare circumstance that a reliable MSE 16.8
measure of fair value is no longer available or because the ‘two preceding financial years’
referred to in the definition of ‘held-to-maturity investments’ have passed, it becomes appropriate
to carry an investment at cost or amortised cost rather than at fair value, the fair value carrying
amount of the investment on that date becomes its new cost or amortised cost, as applicable.

11.5.5 Is any previous gain or loss on the asset that has been recognised directly in equity in MSE 16.8
accordance with paragraph 12.4.2 above?

11.6 Impairment

Held-to-maturity investments
11.6.1 Has the amount of the loss been recognised in profit or loss, if there is objective evidence that MSE 16.11
an impairment loss on held-to-maturity investments carried at amortised cost incurred,?

11.6.2 In case of reversal of im pairment loss, has the amount of the reversal been recognised in profit MSE 16.12
or loss?

Investments Carried at Cost

11.6.3 If impairment loss has been incurred on an unquoted equity instrument that is not carried at fair MSE 16.13
value, has the amount of the impairment loss been measured as the difference between the
carrying amount of the investment and the present value of estimated future cash flows
discounted at the current market rate of return for a similar investment?

Have such impairment losses been reversed?

Available-for-Sale Investments
11.6.4 When there is an objective evidence that the asset is impaired, has the cumulative loss which MSE 16.14
was recognised directly in equity been removed and recognised in profit or loss?

The amount of the cumulative loss that is removed from equity and recognised in profit or loss MSE 16.15,
under paragraph 16.14 of MSE Standard is the difference between the acquisition cost (net of MSE 16.16
any principal repayment and amortisation) and current fair value, less any impairment loss on
that investment previously recognised in profit or loss. Impairment losses recognised in profit or
loss cannot be reversed through profit or loss.

11.6.5 Has the reversal in the impairment loss been recognised in profit or loss? MSE 16.17

11.7 Disposals of Investments

11.7.1 On disposal of an investment, has the difference between: MSE 16.18

a. the carrying amount; and
b. the sum of (i) the consideration received and (ii) any cumulative gain or loss that was
recognised directly in equity been recognised in profit or loss?

11.8 Disclosures

11.8.1 For each class of investment, has the following been disclosed: MSE 16.19

(i) information about the extent and nature of investment, including significant terms and
conditions that may affect the amount, timing and certainty of future cash flows; and

(ii) the accounting policies and methods adopted, including the criteria for recognition and
the basis of measurement applied.

11.8.2 Has the Entity disclosed the fair value of each class of investment, in a way that permits it to be MSE 16.20
compared with the corresponding carrying amount in the balance sheet.

11.8.3 Has the Entity disclosed the following if investments in unquoted shares are measured at cost: MSE 16.21

The Institute of Chartered Accountants of Pakistan 19

 Para # DISCLOSURE MADE

YES NO N/A
a. the fact that fair value cannot be measured reliably,
b. description of the investment,

c. their carrying amount,

d. an explanation of why fair value cannot be measured reliably and,

e. the range of estimates within which fair value is highly likely to lie(if possible)?

11.8.4 If investments are sold whose fair value previously could not be reliably measured, has the MSE 16.21
following been disclosed:
a. the fact,
b. the carrying amount of such investments at the time of sale and
c. the amount of gain or loss recognised?

11.8.5 Has the Entity disclosed the carrying amount of investments pledged as collateral for liabilities, MSE 16.22
the carrying amount of investments pledged as collateral for contingent liabilities, and any
material terms and conditions relating to assets pledged as collateral?

11.8.6 Has the Entity disclosed the reason for reclassification if it reclassified an investment measured MSE 16.23
at cost or amortised cost rather than at fair value?

11.8.7 Has the Entity disclosed the nature and amount of impairment loss recognised in profit or loss MSE 16.24
separately for each significant class of investment?

12.0 LONG TERM LOANS AND ADVANCES

12.1 Has the following been shown under separate sub-heads, distinguishing between considered good and Sch II. 3(A)
considered bad or doubtful of the Entity’s:
(i) loans and advances to related parties; and
(ii) other loans and advances.

12.2 Has the Information on terms and conditions, securities obtained and any other material information been Sch II. 3(B)
disclosed?

12.3 Has provision been made for bad or doubtful loans and advances shown as a deduction Sch II. 3( C)
under paragraph 13.1 above?

13.0 LONG-TERM DEPOSITS AND PREPAYMENTS

13.1 Has the Entity separately disclosed all material items related to: Sch II. 4
(i) long-term deposits, and
(ii) long-term prepayments.

14.0 CURRENT ASSETS

14.1 Have the current assets been classified under the following sub-heads appropriate to the Entity’s affairs: Sch II.5(A )

(i) stores, spare parts and loose tools distinguishing, where practicable, each from the
other;
(ii) stock- in-trade distinguishing between appropriate classifications;
(iii) trade debts other than loans or advances, showing separately debts considered good
and debts considered doubtful or bad;
(iv) loans and advances, showing separately those considered good and those considered
doubtful or bad;
(v) trade deposits and short term prepayments and current account balances with
statutory authorities.
(vi) interest accrued;
(vii) other receivables
(viii) financial assets, other than as mentioned in clauses (iii) to (vii) above, and cash and
bank balances;
(ix) tax refunds due from the Government; and
(x) cash and bank balances, distinguishing between current and deposit accounts, where
applicable.

14.2 Have the following particulars in the case of clauses (iii), (iv) and (viii) of 15.1 above been stated: Sch II.5(B).

The Institute of Chartered Accountants of Pakistan 20

 Para # DISCLOSURE MADE

YES NO N/A
(i) the aggregate amount due by directors and chief executive and executives of the Entity and
any of them severally or jointly with any other person; and
(ii) aggregate amount due by related parties, other than in clause (i) of 13.1 above; names to be
specified in each case.

14.3 Has the following amount in aggregate been disclosed in case of clause (iv) of 13.1 above: Sch II.5( C)
(i) investments in related parties; and
(ii) other investments.

14.4 Has the following been disclosed as investments under the head current assets, for the purposes of Sch II.5(D)
clause (i) and (ii) of 13.3 above, indicating separately:
(i) held to maturity investments;
(ii) available for sale investments; and
(iii) held for trading.

14.5 Has the provision been made for diminution in the value of or loss in respect of any current asset Sch II.5(E).
and shown as a deduction from the gross amount of the respective assets?

15.0 INVENTORIES

15.1 Are the following disclosed in the financial statements:-

a. the accounting policies adopted in measuring inventories including the cost formula used; MSE 6.6

b. the total carrying amount of inventories and the carrying amount in classifications
appropriate to the Entity; MSE 6.6

c. the carrying amount of inventories carried at FV less cost to sell; MSE 6.6

d. the amount of inventories recognised as an expense during the period; MSE 6.6

e. the amount of any write-down of inventories recognised as an expense in MSE 6.6

the period (refer MSE 6.5) ;

f. the amount of any reversal of any write-down that is recognized as a reduction

in the amount of inventories recognised as expense in the period (refer MSE 6.5); MSE 6.6

g. the circumstances or events that led to the reversal of a write down of

inventories (refer MSE 6.5); and MSE 6.6

h. the carrying amount of inventories pledged as security for liabilities. MSE 6.6

The Institute of Chartered Accountants of Pakistan 21

 Para # DISCLOSURE MADE

YES NO N/A
PART III INCOME STATEMENT

1.0 Has the profit and loss account been drawn up so as to disclose separately the
manufacturing, trading and operating results. In the case of manufacturing concern, has the
cost of goods manufactured also be shown? Sch. III. 1

2.0 Whether the profit and loss account disclosed all material items of income and expenses
including the following:- Sch. III. 2(A)

(i) The turnover and showing as deduction therefrom trade discount and
sales tax.

(ii) Expenses, classified according to their function under the following

sub-heads, along with additional information on their nature, namely:-
(a) Cost of sales;
(b) distribution cost;
(c) administrative expenses;
(d) other operating expenses; and
(e) finance cost

(iii) Other operating income, namely:-

(I) Income from financial assets;

(ii) income from investments in and debts, loans, advances and
receivables to each related party; and
(iii) income from assets other than financial assets.

3.0 Has the Entity disclosed separately the amount of interest on borrowings from related parties? Sch. III. 2(B)

4.0 Has the Entity disclosed other information relating to the following, namely:- Sch. III. 2(C)

(I) debts written off as irrevocable distinguishing between trade debts,

loans, advances and other receivables; and
(ii) provisions for doubtful or bad debts distinguishing between trade
debts, loans advances and other receivables.

5.0 Has the Entity, as a minimum, on the face of the income statement disclosed the following line items: MSE 1.22

a. revenue;

b. the results of operating activities;

c. finance costs;

d. tax expense;

e. net profit or loss for the period.

Additional line items, headings and subtotals can be presented on the face of the income statement
when such presentation is necessary to present fairly the Entity's financial performance.

6.0 Have all items of income and expense recognised in a period been included in the determination of the MSE 1.23
net profit or loss unless the standard requires or permits otherwise?

7.0 When items of income and expense within profit or loss from ordinary activities are of such size, nature MSE 1.24
or incidence that their disclosure is relevant to explain the performance of the Entity for the period, has
the nature and amount of such items been disclosed separately?

8.0 Has the Entity presented, either on the face of the income statement or in the notes to the income MSE 1.26
statement, an analysis of expenses using a classification based on either the nature of expenses or their
function within the Entity?

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 Para # DISCLOSURE MADE

YES NO N/A
9.0 If the Entity classified expenses by function, has it disclosed additional information on the nature of expenses,
including the following:-
a. depreciation and amortization expense
b. staff costs MSE 1.27

10.0 Has the Entity disclosed, in the notes, the amount of dividends per share declared for the period covered MSE 1.28
by the financial statements?

11.0 Has the Entity presented any items of income and expense as extraordinary items, either on the face of MSE 1.29
the income statement or in the notes?

12.0 Has offsetting taken place when items of gains, losses and related expenses are not material? MSE 1.10

13.0 Has the following been disclosed:-

a. the amount of each significant category of revenue recognized during MSE 9.11(b)
the period including revenue arising from:

i) the sale of goods?

ii) the rendering of services?
iii) interest?
iv) royalties?
v) dividends?

b. the amount of revenue arising from exchange of goods or services MSE 9.11(c )
included in each significant category of revenue.

14.0 Has the Entity stated the following by way of a note: Sch. III 4

(i) The aggregate amount charged in the financial statements in respect of

the directors, chief executive and executives by the Entity as fees,
remuneration, allowances, commission, perquisites or benefits or in any
other form or manner and for any services and shall give full particulars
of such aggregate amounts separately for the directors, chief executive
and executives together with the number of such directors and
executives, under appropriate heads, such as:
(a) fees;
(b) managerial remuneration;
(c ) commission or bonus, indicating the nature thereof;
(d) reimbursable expenses which are in the nature of a perquisite or benefit;
(e) pension, gratuities, Entity's contribution to provident, superannuation
and other staff funds, compensation for loss of office and in connection
with retirement from office;
(f) other perquisites and benefits in cash or in kind stating their nature and, where
practicable, their approximate money values; and
(g) the amounts, if material, by which any items shown above are
affected by any change in an accounting policy.

15.0 Has the Entity disclosed the amount of exchange differences recognised in profit or loss for the period? MSE 13.5

16.0 Have the exchange differences arising on the settlement of monetary items at different rates at which MSE 13.3
they were initially recorded during the period, been recognised as income or as expenses in the period in
which they arose?

17.0 When a gain or loss on a non-monetary item is recognised directly in equity, has any exchange MSE 13.4
component of that gain or loss been recognised directly in equity?

18.0 When a gain or loss on a non-monetary item is recognised in profit or loss, has any exchange MSE 13.4
component of that gain or loss been recognised in profit or loss?

The Institute of Chartered Accountants of Pakistan 23

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YES NO N/A
19.0 When inventories are sold, has the carrying amount of those inventories been recognized as an MSE 6.5
expense?

20.0 Has the amount of any write-down of inventories to net realisable value and all losses of inventories MSE 6.5
been recognised as an expense in the period in which the write-down or loss occurs?

21.0 Has the amount of any reversal of any write-down of inventories arising from an increase in net MSE 6.5
realisable value recognised as a reduction in the amount of inventories been recognised as an expense
in the period in which the reversal occurs?

22.0 Has the gain or loss of an item of property, plant and equipment been included in profit or loss when the MSE 3.36
item is derecognised?

22.0 a Has the gain been classified as revenue? MSE 3.36

23.0 Has the expenditure on research (or on the research phase of an internal project) been recognised as an MSE 5.5
expense when it is incurred?

24.0 Whether gains or losses arising from the retirement or disposal of an intangible asset been determined MSE 5.25
as the difference between the net disposal proceeds and the carrying amount of the asset recognised as
income or expense in the income statement?

25.0 Gains and losses in Investment

25.1 When there is a change in the fair value of a financial asset or financial liability MSE 16.9
has the gain or loss been recognised as follows:

a. A gain or loss on an invesment classified as at fair value

to be recognised in profit or loss.

b. A gain or loss on an available-for-sale investment to be recognised

directly in equity, through the statement of changes in equity
except for impairment losses and foreign exchange gains and losses
until the investment is derecognised, at which time the cumulative gain
or loss previously recognised in equity, is recognised in profit or loss.

25.2 Has the interest calculated using the effective interest method been recognised in profit or loss? MSE 16.9

25.3 For investment carried at amortised cost, has a gain or loss been recognised
in profit or loss when the investment is derecognised or impaired, and through MSE 16.10
the amortisation process?

26.0 Related Party Transactions

26.1 Has the Entity disclosed the following information: MSE 15.3

a. the relationship between parent and subsidiary (irrespective of whether there have
been transactions between them);
b. the name of the Entity’s parent;
c. if different (from b) the ultimate controlling party; or
d. if neither the Entity’s parent nor the ultimate controlling party produces
financial statements available for public use, the name of the next most senior parent.

26.2 If there have been transactions between related parties, has the Entity disclosed: MSE 15.4

a. the nature of the related party relationship; and

b. information about the transactions and outstanding balances necessary for

an understanding of the potential effect of the relationship on the financial
statements including at a minimum, the following disclosures:

(i) the amount of the transactions;

The Institute of Chartered Accountants of Pakistan 24

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(ii) the amount of outstanding balances and:
– their terms and conditions, including whether they are secured, and
the nature of the consideration to be provided in settlement; and
– details of any guarantees given or received;
(iii) provisions for doubtful debts related to the amount of outstanding
balances; and
(iv) the expense recognised during the period in respect of bad or doubtful
debts due from related parties.

26.3 Has the Entity disclosed the following transactions (examples), if they are with a related party: MSE 15.5

a. purchases or sales of goods (finished or unfinished);

b. purchases or sales of property and other assets;
c. rendering or receiving of services;
d. leases;
e. transfer of research and development;
f. transfer under licence agreements;
g. transfers under finance arrangements (including loans and equity
contributions in cash or in kind);
h. provision of guarantees or collateral; and
i. settlement of liabilities on behalf of the Entity or by the Entity on behalf of another party.

26.4 If related party transactions were made on terms equivalent to those that prevail in arm’s length MSE 15.6
transactions, has the disclosures made only if such terms substantiated?

26.5 Are the items of similar nature disclsoed in aggregate? MSE 15.7

27.0 INCOME TAX

27.1 Have current and deferred tax been recognised as income or an expense and included in profit MSE 11.9
or loss for the period, except to the extent that the tax arises from a:

a. transaction or event which is recognised, in the same or a different period, directly in

equity); or
b. business combination.

27.2 Have current and deferred tax been charged or credited directly to equity if the tax relates to MSE 11.10
items that credited or charged in the same or a different period directly to equity?

27.3 Are the major components of tax expense (income) disclosed separately ? MSE 11.14

The Institute of Chartered Accountants of Pakistan 25

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PART IV CASH FLOW STATEMENT

1.0 Is the cash flow statement during the period classified into operating, investing and financing activities? MSE 2.1

2.0 Has the Entity report cash flows from operating activities using either: MSE 2.5

a. the direct method, whereby major classes of gross cash receipts and gross
cash payments are disclosed? or

b. the indirect method, whereby net profit or loss is adjusted for the effects of
transactions of non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments, and items of income or expense
associated with investing or financing cash flows?

3.0 Has the Entity reported separately major classes of gross cash receipts and gross MSE 2.6
cash payments arising from investing and financing activities, except to the extent
that cash flows are reported on a net basis in accordance with MSE 2.7?

4.0 Has the Entity decided to report cash flows from the following operating, investing or MSE 2.7
financing activities on a net basis:

a. cash receipts and payments on behalf of customers when the cash flows
reflect the activities of the customers rather than those of the Entity; and

b. cash receipts and payments for items in which the turnover is quick, the
amounts are large, and the maturities are short?

5.0 Have the cash flows arising from transactions in a foreign currency been recorded in a Entity’s reporting MSE 2.8
currency by applying to the foreign currency amount the exchange rate between the reporting currency
and the foreign currency at the date of the cash flow?

6.0 If investing and financing transactions are excluded from the cash flow statement are such transactions
disclosed elsewhere in the financial statements in a way that provides all the relevant information
about these investing and financing activities? MSE 2.9

7.0 Has the disclosure made of the components of cash and cash equivalents and a reconciliation
of the amounts in cash flow statement been presented with the equivalent items reported
in the balance sheet? MSE 2.10

8.0 Are cash flows from interest and dividends received and paid, disclosed separately?
Are they classified in a consistent manner from period to period as either operating,
investing or financing activities? MSE 2.11

9.0 Are cash flows arising from income taxes separately disclosed and classified as cash flows from
operating activities unless they can be specifically identified with financing and investing activities? MSE 2.12

10.0 Ha sthe Enity disclosed the amount of significant cash and cash equivalent balances that are not MSE 2.15
available for use by the Entity, together with a commentary by management?

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PART V STATEMENT OF CHANGES IN EQUITY

5.1 Has the Entity presented a statement as a separate component of its financial statements showing:- MSE 1.30

a. the net profit or loss for the period;

b. each item of income and expense that, as required by other Standards, is recognised directly in

c. the cumulative effect of changes in accounting policies and corrections of fundamental errors

5.2 In addition to 5.1 above has the Entity presented, either within the statement or in the notes he following?

d. capital transactions with owners and distributions to owners; MSE 1.30

e. the balance of accumulated profit or loss at the beginning of the period and at the balance sheet

f. a reconciliation between the carrying amount of each class of equity capital, share premium and

E/SME Stadnards/MSE Diclosure Checklist/MSE Disclsoure checklist (final for website)

The Institute of Chartered Accountants of Pakistan 27