IAS 20 Accounting for Government Grants and Disclosures
IAS 20 Accounting for government grants and disclosures of government assistance
The auditor needs to verify the grants have been properly recognized as related to income and capital expenditure in the accounting period. In particular, the auditor should ensure that the conditions of the grant are to be met; they may be repayable within specific circumstances. It is also essential to verify such the grants have to be accounted for in accordance along with IAS 20. As for example which capital grants are acknowledged over the expected needful life of the revenue grants and related asset are matched against about expenditure.
There are two acceptable issues of accounting for capital grants. Either they can be netted of against the asset the total cost of the asset is then depreciated or else the grant can be treated as deferred income and then located to the income statement on the similar basis as depreciation is charged on the related asset. Accuracy and re-performance tests should be performed through the auditor. The auditor should make sure about the accounting policy is suitable in accordance along with the standard and properly discussed.