Financial Statements & Reporting · PakistanFinancial statements prepared to the framework your company’s size requires, and ready for your auditor.
We prepare annual financial statements under the Companies Act 2017 and the applicable standards, work with your independent auditor through the audit, and produce management accounts during the year if you need them.
Accounting
At a glance
- Authorities
- Securities and Exchange Commission of Pakistan (SECP) · Institute of Chartered Accountants of Pakistan (ICAP) · Federal Board of Revenue (FBR)
- Forms & references
- IFRS for SMEsRevised AFRS for SSEsAnnual return (Form A)Income tax return
- Law
- Companies Act 2017 and its Third Schedule
- Frameworks
- IFRS, IFRS for SMEs or Revised AFRS for SSEs, by company size
- AGM
- Generally within 120 days of the financial year end
- Audit
- By an independent chartered accountants firm, not by us
Overview
What it is, and why it matters.
Under the Companies Act 2017, a company’s directors must prepare annual financial statements that give a true and fair view, have them audited where required, and lay them before members at the annual general meeting. For most companies, the AGM must be held within 120 days of the financial year end.
The accounting framework depends on the company’s classification under the Third Schedule to the Act. Public interest and large-sized companies use IFRS as notified by SECP, medium-sized companies use IFRS for SMEs, and small-sized companies use the Revised Accounting and Financial Reporting Standard for Small-Sized Entities (AFRS for SSEs) issued by ICAP, with the option of a higher framework. Classification turns on paid-up capital, turnover and employee numbers, and SECP has revised the thresholds before, so we confirm it each year.
Most companies must have their financial statements audited by an independent firm of chartered accountants. We are not your auditors: we prepare the statements and supporting schedules and handle the auditor’s queries, so the audit runs smoothly. The same statements then support the income tax return and the reconciliation of accounting profit to taxable income.
Who needs it
Who typically needs it.
- 01
Small and medium private companies
SMEs that need annual audited accounts, a directors’ report where required, and figures ready for the income tax return.
- 02
Companies raising finance
Businesses applying for bank facilities or bringing in investors, who will ask for audited statements and management accounts.
- 03
Pakistani subsidiaries of foreign groups
Local companies owned by a US, UK or other parent that need statutory statements in Pakistan and reporting packs for the group.
- 04
Companies moving up a size category
Businesses whose growth takes them from small to medium-sized, or medium to large-sized, and who must change framework as a result.
When you need it
The moments that usually trigger it.
- Your 30 June year end has passed and your auditor is asking for draft accounts.
- Your AGM date is approaching and the statements aren’t ready.
- Your turnover or paid-up capital has grown and you may now fall into a different Third Schedule category.
- A bank has asked for audited statements and quarterly management accounts.
- Your foreign parent needs your figures in its own format and currency.
- Your previous accountant has left and last year’s working papers are incomplete.
Scope
Exactly what we handle.
Our engagement letter lists these specifically, so you know what is included before any work begins.
- 01
Confirming your Third Schedule classification and the framework that applies.
- 02
Year-end adjustments: accruals, prepayments, depreciation, inventory, provisions and deferred tax where required.
- 03
Draft annual financial statements with the notes and disclosures your framework requires.
- 04
A reconciliation of accounting profit to taxable income, with schedules for the income tax return.
- 05
Audit support: preparing schedules, answering queries and agreeing adjustments with your auditors.
- 06
Monthly or quarterly management accounts.
- 07
Reporting packs for foreign parents, mapped to the group’s chart of accounts and currency.
The process
How it runs, step by step.
Timings depend on the authority and on how quickly documents come together. We tell you what’s typical for your case at the start.
Start with a conversationClassify and plan
We confirm your Third Schedule category, framework and year-end timetable, working back from your AGM date and the auditor’s fieldwork.
Complete year-end reconciliations
We complete reconciliations for the bank, debtors, creditors, tax balances and fixed assets, and post year-end adjustments.
Draft the statements
We prepare draft financial statements and notes, and review the key judgements with management.
Work through the audit
We give the auditor schedules and explanations, and process any adjustments they propose once you agree them.
Final statements and next steps
Once the board approves the statements and the auditor signs, they go to members for the AGM and support the tax return and any SECP filings.
What we’ll need
The information to have ready.
A typical checklist. After the first conversation we send a version specific to your situation, so you don’t gather anything you don’t need.
Company documents
- SECP certificate of incorporation, memorandum and articles of association
- Last year’s audited financial statements and the auditor’s management letter
- Board and shareholder resolutions for the year
Year-end records
- Bank statements and bank balance confirmations
- Inventory count sheets
- Fixed asset additions and disposals
- Loan agreements and related party balances
Tax information
- Withholding certificates and CPRs
- Sales tax returns for the year
- Last income tax return and any FBR orders or assessments
Please don’t email passports or bank statements. Once we’ve spoken, you’ll get access to a secure upload.
Common mistakes
Where this usually goes wrong.
The problems we are most often asked to fix, and what they tend to cost.
- Mistake 01
Using the wrong framework
A company that has outgrown the small-sized category but still reports under AFRS for SSEs may produce statements the auditor can’t sign without modification.
- Mistake 02
Starting the audit too late
Late statements delay the AGM and the related SECP filings, and can lead to penalties for the company and its directors.
- Mistake 03
Accounts that don’t reconcile to tax filings
If turnover in the accounts differs from sales tax returns or withholding statements without a reconciliation, the FBR is likely to ask why.
- Mistake 04
Undocumented related party transactions
Loans from directors and dealings with associated companies need disclosure and support. Missing paperwork causes audit delays and tax questions.
Worth knowing
The limits, stated upfront.
We do not perform statutory audits. The audit must be carried out by an independent firm of chartered accountants, and that firm can’t be the one that prepared the accounts.
Directors remain responsible for the financial statements, for holding the AGM and for making filings on time.
Third Schedule thresholds and filing requirements are set by SECP and can change; we confirm your classification every year.
Listed companies, banks, insurers and other regulated entities have additional requirements that may need specialist input.
Questions
Financial Statements & Reporting: frequently asked.
If yours isn’t here, ask us directly. We’ll answer in plain terms.
Ask a questionWhich accounting standards apply to my company?
That depends on your classification under the Third Schedule to the Companies Act 2017. Broadly, public interest and large-sized companies use IFRS, medium-sized companies use IFRS for SMEs, and small-sized companies use the Revised AFRS for SSEs, though a company may choose a higher framework.
Does every private company need an audit?
Most do. The Companies Act 2017 exempts private companies whose paid-up capital is below a threshold set in the Act, which SECP can raise by notification, so we check whether the exemption applies before planning your year end.
Can you be our auditors?
No. We prepare your financial statements and support the audit, but the audit itself must be carried out by an independent firm of chartered accountants. We can work with whichever auditor you appoint.
How are management accounts different from annual financial statements?
Management accounts are internal monthly or quarterly reports for directors and lenders. Annual financial statements are the formal accounts, audited where required, that are laid before members and used for tax and SECP purposes.
When do the financial statements need to be ready?
In time for the annual general meeting, which most companies must hold within 120 days of the year end. For a 30 June year end that means late October, so drafts should reach your auditor well before then.
Can you prepare reporting for our parent company abroad?
Yes. We can produce the Pakistani statutory statements and a separate pack in the parent’s format and currency, with a reconciliation between the two.
Related
Often needed alongside this.
The equivalent in our other countries
Speak with a consultant
Talk to us about financial Statements & Reporting.
Pick the closest match and we’ll take it from there. You’ll get a written scope and fee before any work begins.
Or use our three-step guide, or email hello@fiscorra.com