Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Audit Procedures for Government Grants and Subsidies: Government grants and subsidies are financial assistance provided by government entities to support specific activities or initiatives undertaken

Audit Procedures for Government Grants and Subsidies:
Government grants and subsidies are financial assistance provided by government entities to support specific activities or initiatives undertaken by businesses or organizations. These grants can take various forms, such as cash grants, tax incentives, or non-monetary assistance. Audit procedures for government grants and subsidies ensure proper recognition, measurement, and disclosure in the financial statements. Here are some key audit procedures:
Identification and Classification: Auditors identify and classify government grants and subsidies received by the entity, distinguishing between capital grants and revenue grants. Capital grants are typically related to the acquisition or construction of long-term assets, while revenue grants are intended to support ongoing operations.
Verification of Eligibility Criteria: Auditors verify that the entity meets the eligibility criteria specified by the government for receiving grants and subsidies. This may involve reviewing relevant documentation, such as grant agreements or application forms, to ensure compliance with eligibility requirements.
Assessment of Recognition and Measurement: Auditors assess whether government grants and subsidies are recognized in accordance with applicable accounting standards, such as International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). They verify that grants are recognized as income when there is reasonable assurance of compliance with grant conditions and that subsidies are measured at fair value.
Review of Compliance: Auditors review the entity's compliance with the terms and conditions of government grants and subsidies. This includes ensuring that funds are used for their intended purposes and that any restrictions or obligations imposed by grant agreements are adhered to.
Disclosure Requirements: Auditors evaluate the adequacy and accuracy of disclosures related to government grants and subsidies in the financial statements and footnotes. This includes disclosing the nature and extent of government assistance received, any conditions attached to the grants, and the impact on the entity's financial position and performance.
Objective Type Question:
Based on the audit procedures for government grants and subsidies, which audit procedure involves verifying that government grants and subsidies are recognized in accordance with applicable accounting standards?
A) Identification and Classification
B) Verification of Eligibility Criteria
C) Assessment of Recognition and Measurement
D) Review of Compliance
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Auditing And Other Assurance Services

Authors: Ray Whittington, Kurt Pany

18th Edition

0077486277, 978-0077486273

More Books

Students also viewed these Accounting questions

Question

Understand the use of different performance-rating techniques

Answered: 1 week ago