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WATACHEM

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WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): "Advances, Prepayments and Deposits" include Taka 617,111,494 as advance against capital expenditures payment to suppliers for BMRE works in respect of new Plant & Equipment. However, a portion of such expenditure was financed by short term loan instead of long term loan. (cont.11)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): Commissioner of Customs Excise and VAT Directorate. The Company has filed an appeal to the Appellate Tribunal which is still pending. 4.In Note # 06 to the financial statements, the Company has explained the reason for not making any loss allowance against Trade Receivable for Expected Credit Loss (ECL) in accordance with the requirements of IFRS 9. 5. As disclosed in Note # 8.02 to the financial statements (cont.10)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): the inventories as at 30 June 2020, we have applied alternative audit procedures subsequently during our field audit works as per the guidelines issued by the International federation of Accountants (IFAC) and The Institute of Chartered Accountants of Bangladesh (ICAB) in this regard. 3.In Note # 51 to the financial statements, the company has disclosed the "Contingent Liabilities" of Taka 41,427,896 against the claim from (cont.9)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): ended 30 June 2020. However, management's evaluation of the events and conditions and management's plans to mitigate these matters have been described in the Note # 53. 2.No physical verification of the company's inventories as disclosed in Note # 5 to the financial statements was conducted by us and by the company as on 30 June 2020 considering health and safety issues due to Corona Pandemic. However, to confirm (cont.8)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): temporarily closed its Head Office for at least 1.5 months in response to COVID-19 while Factory operation had been continuing at very limited scale just to keep the machineries running and continuing services to Dhaka and Chittagong WASA. At this point, the Company has financially affected by the ongoing COVID-19 pandemic on the Company's business, results of operations, financial position and cash flows for the year (cont.7)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): prescribed by rules". However, the company has not introduced yet group insurance for permanent employees despite being employed more than 100 permanent employees. This indicates non-compliance of the provision of the section 99 of the Labor Act 2006 as amended in 2013. Emphasis of Matter: Without modifying our opinion, we report as follows: 1. As disclosed in Note # 53 to the financial statements, the Company (cont.6)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): has executed Trust Deeds this year. Moreover, the fund amount has been used by the company in its operation as internal source of financing without providing any interest for such usage as per section 240(3) of the said act. 4. As per Section 99 of the Labor Act 2006 as amended in 2013, it is required that "In the establishments wherein minimum of 100 permanent workers are employed, must introduce group insurance in the manner (cont.5)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): the company and the same is shown under the head of "Workers Profit Participation Fund and Welfare Fund" as current liabilities in the financial statements as on 30 June 2020. However, the amount has not been distributed yet with a proportion of 80:10:10 to the Participatory Fund, Welfare Fund and Workers' Welfare Foundation Fund respectively as per the Labor Act 2006 as amended in 2013 although the company (cont.4)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): based on the revalued carrying amount of the assets and depreciation based on the asset's original cost was not transferred from Revaluation Surplus to Retained Earnings for a total of 04 (Four) years from 2008-2011 as per Para 41 of IAS 16. Moreover, the company has not maintained Fixed Asset Register properly. 3. Reference to Note # 23 to the financial statements, provision for WPPF of Taka 35,171,413 has been provided by (cont.3)

WATACHEM 01-Nov-2020

(Continuation news of WATACHEM): However, as per Para 55 of IAS 16, a company should not cease the depreciation when the assets become idle or is retired from active use unless the assets are fully depreciated. As a result, depreciation for the current year has been undercharged by Taka 7,476,851. 2. Reference to Note # 12 to the financial statements, the Company has revalued its Property, Plant and Equipment in 2008 but the amount of surplus between depreciation (cont.2)

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