CA Jaydeep Babubhai Vadher
Quick Summary
In the world of financial audits, ensuring the accuracy of a company's reported revenue is one of the most vital tasks. Revenue, being one of the largest figures on a financial statement, requires careful scrutiny. In India,Ind AS 115 provides the necessary framework for recognizing revenue, based o
Daily Limit Reached
You have reached your daily limit of 2 Free Articles
Subscribe to CCI PRO for unlimited access
Why Upgrade to CCI PRO?
- No Ads
- WhatsApp Broadcasts
- Daily E-Newsletter
- Unlimited Articles Access
BEST VALUE
2 YEAR PLAN
3,499
(Inclusive of GST)
1 YEAR PLAN
1,999
(Inclusive of GST)
View all CCI PRO benfits
Already a PRO member? Login here for an ad-free experience.
FAQ :
Ind AS 115, Revenue from Contracts with Customers, provides a framework for companies to recognise revenue from customer contracts, ensuring it is recorded when control of goods or services passes to the customer, leading to more consistent and transparent reporting.
The key steps include identifying the contract with the customer, identifying distinct performance obligations within the contract, determining the transaction price, allocating the transaction price to each performance obligation, and recognising revenue when each obligation is fulfilled.
Auditors verify revenue by understanding the company's revenue streams, testing internal controls, assessing contract terms, performing cut-off testing, reviewing variable considerations, verifying revenue recognition for actual transactions, conducting substantive testing, and ensuring proper disclosures are made.
Cut-off testing ensures that revenue transactions are recorded in the correct accounting period, particularly important around year-end, to prevent revenue from being recognised prematurely or in the wrong period.
For construction projects, Ind AS 115 typically requires revenue to be recognised over time based on the percentage of completion, with auditors verifying that the work done aligns with this method and that contract terms and pricing are correctly applied.
CAclubindia
