Mobilization advance
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 August 2012
Dear Members,
Recently I am conducting a audit of PSU, which awarded a contract to a construction company for construction of a building. As per the agreement, Mobilization advance to the tune of 10 per cent of the total value of contract was given to construction company.The PSU is depicting the mobilization advance in its books of accounts as capital work in progress. I wanted to know whether the depiction in the books of PSU is correct or not. If not, what will be the depiction? Whether it will come under advance to contractor?
regards
ram veer
Recently I am conducting a audit of PSU, which awarded a contract to a construction company for construction of a building. As per the agreement, Mobilization advance to the tune of 10 per cent of the total value of contract was given to construction company.The PSU is depicting the mobilization advance in its books of accounts as capital work in progress. I wanted to know whether the depiction in the books of PSU is correct or not. If not, what will be the depiction? Whether it will come under advance to contractor?
regards
ram veer
Amol S Joglekar
(Expert)
08 August 2012
In a similar case, the PSU (Engineering Projects of India) being a Govt company works on the accounting practices of Govt. As an auditor, we need to put a clarificatory note in our report.
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