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Exercise 1.3 the plans while waiting for the external
You are the owner and Managing Director auditors to finish their job”.
(MD) of Kumekucha Company – a Required:
privately owned company that engages (a) Identify different individuals and
in manufacturing of furniture and other entities mentioned in Kumekucha
associated products. You have been Company case as presented above,
FOR ONLINE READING ONLY
approached by one of the subordinates then proceed to position them within
(Mr. Samuel) asking whether the the different typologies of users
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company will be able to restore some of of accounting information, as
the fringe benefits ceased due to financial discussed in this chapter. You can use
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problems that the company was facing. a matrix chart to simplify your task.
You are not able to provide the answers (b) Provide relevant explanations for your
outright but you promise that, when the answer in part (a) above. Consider
financial statements are issued in the next matching the different individuals
three months, they will provide the basis with different typologies of users of
for deciding whether it will be possible accounting information.
to restore the fringe benefits, which were (c) When the said financial statements are
once stopped. issued, what kind of information do
I cannot answer your question with you think will be of much interest for
certainty though we have been doing negotiating the restoration of fringe
well for some time now, at least for the benefits between the management
past four months. Our contracts with and other employees?
several secondary schools including, (d) Relate some of the narratives used
Bright Future Academy and Gift in the given case of Kumekucha
Secondary Schools have enhanced our Company with the following
performance somewhat. However, we qualitative characteristics of useful
still need to get some kind of assurance accounting information:
from our colleagues in the Department (i) Relevance;
of Accounting. Today is 6 April 2022, (ii) Timeliness;
th
probably by the end of July, 2022, they (iii) Faithful representation; and
will be able to provide us with the early (iv) Verifiability.
draft of financial reports. Then we can
see how they can help us in this matter. Fundamental principles of
However, Mr. Samuel probed for further accounting
information; “will it be possible to use Fundamental principles of accounting are
those financial reports even before their the basic rules or regulations and customs
review by external auditors?” You are that provide guidelines for the systematic
response to the question are as follows: recording of financial information and
“yes tentatively, they can be used to set preparation of financial statements.

Student’s Book Form Five
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