A company valued closing inventory by FIFO method from last four financial year & now company decided to change the method from FIFO to averge price method.
Can company do it in this financial year and continuously will in the coming financial year.
1 Replies
Ritzz
(CA Final - Article )
(365 Points)
Replied 30 September 2013
As Per AS 1 "Disclosure of Accounting Policies" Every change in Accounting policy is permitted only when such change is :
i) permitted by law ii) required by statute iii) such change will show more appropriate working of the said item & reflect more true & fair view of Financial Statements
As a statutory auditor you should comment on such change and should also comment on the appropriateness of accounting method followed for valuation of closing stock.
Also it is the responsibility of the management to disclose the material effect of such change in current year as well as in future periods.
Regards
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