Hema Krishnamurthy

Items that affect the quality of

information in the P&L a/c
Sales
Premature revenue recognition
Gross vs. Net sales
Allowance for doubtful accounts
Other income – non-operating eg. Sale of fixed
asset
Cost of goods sold –
Change in the method of inventory valuation
Change in the method of Depreciation
Capitalize expenses which are normally w/o
Items that affect the quality of
information in the P&L a/c
Defer certain discretionary expenses
Make inadequate provisions by treating
them as ‘Contingent liability”
Extra provisions in good years and write back
in lean years
Revaluation of assets
Lengthening the accounting period
Items that affect the quality of
information in the Balance Sheet
Fixed Assets
revalued;
impairment of intangible assets
Method of depreciation; changes in method
Operating leases
Quality of inventory – realisability; change in
method of valuation
Quality of Receivables – provisions for bad
debts
Items that affect the quality of
information in the Balance Sheet
Realisability of other assets – advances,
deposits etc.,
Deferred revenue expenditure – reasonable
Reserves – revaluation reserve,
Debts & other liabilities – adequacy of
provisions; contingent liability; claims not
booked
Operating lease – ‘off’ balance sheet financing
Guarantees given on behalf of others..