The overall per capita income is approximately $1250 with low literacy rates and high population growth rates. Pakistan is considered as a developing country due to different factors such as higher mortality rates, low literacy ratio, high population growth rates, higher levels of poverty, lack of health care facilities, poor education system etc. It is however, important to note that Pakistan’s economy has suffered a lot in recent times due to war on terror which has created significant law and order situation. (CIA The World Factbook 2011)
Pakistan has its own Institute of Chartered Accountants which is also affiliated with the major international accountancy bodies. Over the period of time, accountancy as a profession has evolved in the country and Pakistan also exports its accountants to GCC countries especially due to overall quality and strength of its accountancy profession.
Engro Corporation is a diversified company engaged in fertilizer, food as well as energy sector. The primary markets of the firm are Pakistan where it mostly sells its output however, it also plans to expand its food business in North America also. (Najeeb 2011). Major competitors of firm include Fauji Fertilizer Limited, Nestle Limited, and Unilever Pakistan etc. Company Industry Assets Market Cap Employees Engro Corp Conglomerate 132,105M 55748.035M2 32023 Pak Packages Food, Beverage 39,625.0M 8.800Bn4 300 Unilever 5Pakistan FMCG 13,554.00M 75.2Bn NA Fauji Fertilizer6 Fertilizer 74,016.94M 131.8Bn 100-500 PSO7 Oil Marketing 202,247.7M 40.90Bn 2000 Lotte Pak8 Chemical 22,896.00M 16.80Bn 2279 The above data about the companies are present on the official website of the Karachi Stock Exchange where all these firms are listed. 2(a) Engro Corp is required to publish its annual audited report in compliance of various domestic as well as international legislation requirements. It prepares following financial statements10: 1. Balance Sheet 2. Profit and Loss Account ( along with statement of comprehensive income) 3. Cash flow statement 4. Statement of changes in equity The first three notes to the accounts discuss following: Legal Status and Operations: In this note the firm has discussed its legal status and operations while at the same time giving a bifurcation of its balance sheet to outline different segments of its business. Note 2 provides the summary of the significant accounting policies adapted by the firm and discusses different policies such as basis of preparation of the accounts, application and interpretation of different accounting standards etc. Note 3 provides critical accounting estimates and judgments and provides a comprehensive understanding of firm’s policies regarding depreciation, impairments, income taxes, fair values of employees investments etc. Appendix Attached 2(b) The basis of preparation of the accounts are the historical cost convention however, firm has disclosed that it also records some financial assets and financial liabilities based on their fair value. It is also to be noted that the financial statements have been prepared in accordance with the approved