Q. REVENUE RECOGNITION

Question

Dear Sir

A Private Limited Company is recognizing its revenue on gross basis. Even, the discount agreed at the time of booking the order is accounted seperately instead of reducing the sale price which is not in line with AS 9.

What is auditor's responsibility in such case. Whether, qualification is required or reporting in E.O.M. is sufficient.

Thanks

Answer 1

Though there may not be any impact on profits, yet the gross revenue seems to be overstated. Depending upon the materiality qualification or EOM should be decided.