Framework of ICAI

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Surinder (Querist)
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23 August 2022 Dear Sir,
Please suggest Comparative Figures and frame work so that its easy to me for audit
Assessee has not disclosed the
comparative figures in the books of accounts as required by the framework of ICAI related to presentation
of financial statements

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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07 July 2024 To address the requirement of disclosing comparative figures in the books of accounts as per the framework of the Institute of Chartered Accountants of India (ICAI), here’s a structured approach and framework you can follow for auditing purposes:

### Framework for Disclosure of Comparative Figures

#### 1. **ICAI Guidelines and Framework:**
- Refer to the ICAI Accounting Standards (Ind AS or AS, depending on applicability).
- Specifically, consider Ind AS 1 (Presentation of Financial Statements) or AS 1 (Disclosure of Accounting Policies) for guidelines on comparative figures.

#### 2. **Audit Approach:**
- **Review Previous Year’s Financial Statements:**
- Obtain and review the previous year's audited financial statements.
- Identify key financial statement items that require comparative figures (e.g., Balance Sheet, Profit and Loss Statement, Cash Flow Statement).

- **Ensure Accuracy and Consistency:**
- Verify that the current year's financial statements include comparative figures for all items required by applicable accounting standards.
- Cross-check numerical data to ensure accuracy and consistency with the previous year's audited figures.

#### 3. **Presentation in Financial Statements:**
- **Balance Sheet:**
- Present current year figures alongside the previous year figures for assets, liabilities, and equity.
- Clearly label and segregate comparative figures to distinguish them from the current year figures.

- **Profit and Loss Statement:**
- Display the current year’s financial performance (revenues, expenses, gains, and losses) alongside the corresponding figures from the previous year.
- Use subtotals and totals to summarize the comparative data effectively.

- **Cash Flow Statement:**
- Show cash inflows and outflows from operating, investing, and financing activities for the current year and the previous year.
- Ensure alignment with the format and disclosures required by relevant accounting standards.

#### 4. **Footnotes and Explanatory Notes:**
- Include footnotes or explanatory notes where necessary to provide context or explanations for significant changes between the current year and the previous years figures.
- Disclose any restatements or adjustments made to comparative figures and provide reasons for such adjustments.

#### **Internal Controls and Documentation:**
- Document the process followed for preparing comparative figures.
- Ensure internal controls are in place to maintain the accuracy and completeness of comparative data.

#### **Audit Findings and Reporting:**
- Document audit findings related to the disclosure of comparative figures.
- Ensure that the audit report reflects compliance with ICAI guidelines and provides assurance on the presentation of comparative information.

### Example Format for Comparative Presentation

Below is a simplified format example for presenting comparative figures in financial statements:

```plaintext
-----------------------------------------------------
| | Current Year | Previous Year |
-----------------------------------------------------
| Balance Sheet | | |
|--------------------------|--------------|---------------|
| Assets | Amount | Amount |
| Liabilities | Amount | Amount |
| Equity | Amount | Amount |
-----------------------------------------------------
| Profit and Loss Statement| | |
|--------------------------|--------------|---------------|
| Revenue | Amount | Amount |
| Expenses | Amount | Amount |
| Profit/(Loss) | Amount | Amount |
-----------------------------------------------------
| Cash Flow Statement | | |
|--------------------------|--------------|---------------|
| Operating Activities | Amount | Amount |
| Investing Activities | Amount | Amount |
| Financing Activities | Amount | Amount |
-----------------------------------------------------
```

### Conclusion

Adhering to the framework provided by ICAI ensures that financial statements are presented accurately and in compliance with accounting standards. By systematically reviewing and disclosing comparative figures, auditors can provide reliable assurance to stakeholders regarding the financial performance and position of the entity over time. Always consult specific accounting standards and guidelines applicable to your jurisdiction for detailed requirements.