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Forensic Accounting

Share depository entity - Broker's cash accounting


The entity  is share depository company  and has special off balance sheet account, where is accounted cash transferred by brokers. the entity is not showing this cash on its balance sheet and shoes it on its off-balance sheet.  

is it correct approach, or entity have to show this cash in balance sheet?

additional information: This special account is for brokers when they buy shares and instead they put cash in share depository's (the company) special account. the legally this account is held by share depository company.

asked Feb 18 in General IFRS Discussion by PCH Level 1 Member (2,340 points)

2 Answers

0 votes
If your company owns the bank account, then you need to take that into your balance sheet. Otherwise it may amount to wrong or even fraudulent accounting practice. Don't you prepare bank reconciliations for this account?
answered Feb 18 by Amith
Thank you for answer. Yes we prepare bank reconciliation for this account.
0 votes

A Off balance sheet refers to those assets and liabilities not appearing on an entity's balance sheet, but which nonetheless effectively belong to the enterprise.

So as cash deposited by brokers doesnot belong to company but disclosure of the fact is required..so treatment is correct as per me

answered Feb 18 by umarhussainia Level 5 Member (10,820 points)
This is not an off balance sheet item as I think. Any standard reference? I think this has to be a current liability in the books.
Yup you are right..it should be shown as current liability



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