The Saudi Organization for Chartered and Professional Accountants provided its opinion on the initial decision of the International Interpretations Committee one stopping entities from the preparation of financial statements on the basis of continuity.
The inquiry was about the late preparation of the financial statements of previous years when the company was operational after the entity decided to cease its operations.
SOCPA clarified that its point of view on this issue stems from the belief that if the company decided to cease its operations and did not publish the financial statements for previous periods, then it must prepare all previous statements on a basis other than the continuity basis even if those financial statements relate to financial years during which the company was, and for the twelve months that follow it, operational, in accordance with the literal text of the International Accounting Standard No. 10 which does not permit the preparation of financial statements on the basis of continuity if the decision to cease operations was issued before the financial statements were approved for publication. Another point of view believes that the financial statements must be prepared according to the circumstances that prevailed at the time when the financial statements were to be prepared for a particular financial year (that is, during the twelve months following the fiscal year) even if those financial statements were prepared at a later time, in accordance with the understanding that the financial period referred to in the standards is the last financial period for which the financial statements are prepared, not previous periods.
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