On 15 December 2020, the company received a confession letter from the finance manager (i.e. Alex Chee) who confessed that he has been lodging fraudulent expense claims over the past 5 years, amounting to some RM4 million. The financial controller’s primary estimates indicate that this figure could be correct; however, he believes it will take at least a couple of months before the exact figure is known. The police have been informed of the fraud and are searching for Alex, who appears to have left the country. 

Required: 

Advise the management with reference to MFRS 137 with regard to the accounting treatment in 2020.

Answer rating: 100% (QA)

ANSWER Contingent liabilities require a credit to the accrued liability account and a debit to an ex... View the full answer