United International University

REPORT
ON

FINANCIAL INSTRUMENT DISCLOSURE PRACTICES

BY LISTED COMPANIES

(ZAHIN TEXTILE, SQUARE TEXTILE, MITHUN

KNETING TEXTILE, SAYHAM TEXTILE, SUFCOO
SPINNING TEXTILE)

OF BANGLADESH
 “FINANCIAL INSTRUMENT DISCLOSURE PRACTICES BY
LISTED COMPANIES OF BANGLADESH”

Course Title: Advanced Financial Accounting-1

Course code: ACN 4136

Submitted To

RANA MAZUMDER
School of Business and Economics (SoBE)
United International University

Submitted By:
GROUP MEMBERS’
SERIAL ID NAME SEC COMPANY
NO.

5 111 131 462 Puja Saha B Mithun Kint

12 111 132 109 Aurpa Mahzabeen B Square Textile
14 111 132 185 Marjia Kajol Rekha B Sayham Textile
15 111 132 189 Afrin Sultana B Safko Spinning Mills LDT.
17 111 141 093 Sadia Alam B Zahintex Industries LDT.

Trimester: Fall 2016

Date of submission: 10TH JANUARY, 2017

10th
January, 2017

RanaMazumder

School of Business and Economics,

United International University

Dhanmondi,Dhaka.

Subject: submission of report paper on “FINANCIAL INSTRUMENT DISCLOSURE

PRACTICES BY LISTED COMPANIES OF BANGLADESH”

Dear Sir,

We have the honor to state you that, we are the student of your section “B” has prepared this
report paper based on “FINANCIAL INSTRUMENT DISCLOSURE PRACTICES BY LISTED
COMPANIES OF BANGLADESH” as a requirement of your respected course “Advance
Financial Accounting 1”. We request you to receive this paper prepared by us based on our
Findings .We have done our level best to complete the report with our little experience and
knowledge.

We are apologizing for any kind of errors and mistakes that would have done by us. We will be
delighted to clarify and queries regarding the report.

Sincerely yours,

Puja Saha

AurpaMahzabeen

MarjiaKajolRekha

Afrin Sultana

Sadia Alam

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ACKNOWLEDGEMENT

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TABLE OF CONTENTS

v|Page
 EXECUTIVE SUMMERY
The Education Initiative reinforces the IFRS Foundation’s goal of promoting the adoption
and consistent application of IFRS by arranging IFRS events (eg major IFRS conferences and
‘train the trainer’ workshops) and by developing material (eg texts—Executives Briefings, A
Guide through IFRS—, comprehensive Framework-based teaching material for those teaching
CA/CPA stream students and comprehensive training material for the IFRS for SMEs). Its
activities are designed to support the Trustees’ duty to foster and review the development of
educational programmes and materials that are consistent with the Foundation’s objectives [IFRS
Foundation Constitution section 15(j)]. Planning the work of the Education Initiative is guided
by its medium-term plan. This medium-term plan (Plan 2012–2016) was developed in
consultation with the IASB and IFRS Foundation senior staff and executive management, IFRS
Foundation Education Advisory Group (EAG), IFRS Advisory Committee, IASB Education
Committee (BEC), appropriate others (eg select World Bank staff) and the Trustees’ Education
and Content Services Committee (TECSC).

The Education Initiative is self-funding. It is staffed by a Director (Michael Wells), two Project
Managers (Guillermo Braunbeck and Elizabeth Buckley), and Investor Education Manager (Fred
Nieto), an Executive Assistant (Gloria Lindfield) and an Academic Fellow (in 2014: Iwona
Nowicka from the German Accounting Standards Board). Consistently with the Trustees’
Strategy review other technical staff at the IASB are increasingly contributing to the
development of IFRS education material. For example, Mariela Isern led the development of the
first chapter of the education material on IFRS 13 which is dedicated to measuring the fair value
of unquoted equity instruments.

Consistently with the objectives of the IFRS Foundation the objectives of the Education
Initiative are: (1) Reinforce IFRS Foundation’s goal of promoting the adoption and consistent
application of IFRS

2. Generate revenue to fund the Education Initiative’s activities 3. In fulfilling the objectives
associated with 1 and 2, to take account of, as appropriate, the special needs of:

(i) small and medium-sized entities, and

(ii) emerging economies.

In striving to achieve its objectives, by making available an appropriate range of high quality,
understandable and up-to-date education material and services about standard-setting, IFRS and
the IFRS for SMEs, the Education Initiative is guided by the following principles.

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 Introduction
Financial instrument disclosure requires (IFRS) disclosures of information about the significance
of financial instruments of an entity and the nature and extent of risks arising from those
financial instruments, both in qualitative and quantitative terms. Specific disclosures are required
in relation to transferred financial assets and a number of other matters.

IFRS 7 was originally issued in August 2005 and applies to annual periods beginning on or after
January 2007.

Objectives
IFRS is a collection of accounting standards that are followed around the globe. International
Financial Reporting Standards is a set of rules at an international level which state how some
transactions can be reported. IFRS helps a company to make its accounts comparable, trustable
and comprehensible. There are several common factors that are observed in companies around
the world. The IFRS was formed with the purpose to make comparison easy among businesses of
the world. The main target of IFRS is to make business simpler at international level. The
businesses around the globe have different accounting standards and different reporting criteria.
It is therefore a tough task to reconcile accounts.
IFRS 7 requires entities to provide disclosures in their financial statements that enable users to
evaluate:
 The nature and extent of risks arising from financial instruments to which the entity is
exposed during the period and at the end of the reporting period and how the entity
manages those risks.
 The significance of financial instruments for the entity’s financial position and
performance.

Financial instruments
Financial instruments are monetary contracts between parties. They can be created, traded,
modified and settled. They can be cash (currency), evidence of an ownership interest in an entity
(share), or a contractual right to receive or deliver cash (bond).
International Accounting Standards IAS 32 and 39 define a financial instrument as "any contract
that gives rise to a financial asset of one entity and a financial liability or equity instrument of
another entity”.
1|Page
Types of financial instruments:

 Cash instruments: Instruments whose value is determined directly by the markets. They
can be securities, which are readily transferable, and instruments such as loans and deposits,
where both borrower and lender have to agree on a transfer.
 Derivative instruments: Instruments which derive their value from the value and
characteristics of one or more underlying entities such as an asset, index, or interest rate.
They can be exchange-traded derivatives and over-the-counter derivatives.

Instrument type
Asset class
Securities Other cash
Debt (long term) Bonds Loans
Debt (short term) T-bills, Commercial paper Deposits Certificates of deposit
Equity Stock N/A

Overview
IFRS requires certain disclosures to be presented by category of instrument based on the
measurement categories. Certain other disclosures are required by class of financial instrument.
For those disclosures an entity must group its financial instruments into classes of similar
instruments as appropriate to the nature of the information presented.

The two main categories of disclosures required by IFRS 7 are:

1. information about the significance of financial instruments.

2. information about the nature and extent of risks arising from financial instruments

Methodology
We have collected data from annual reports of 5 companies of last 5 years. So our sample size is
25. These are our secondary data and using them we will conduct secondary research.

2|Page
 Analysis and Findings

Of

MITHUN KNITTING (Checklist)

2011 2012 2013 2014 2015

1. Has an entity grouped financial instruments     

into classes according to the nature of the
information disclosed and the characteristics
of those financial instruments

2.Has an entity provided sufficient     

information to permit reconciliation to the
line items presented in the balance sheet
3.Has the entity disclosed information that     
enables users of its financial statements to
evaluate the significance of financial
instruments to its financial position and
performance

4.Have the carrying amounts of financial assets     

at fair value through profit or loss been
disclosed either on the face of the Statement of
Financial position or in the notes

3|Page
 a. financial assets at fair value through profit or     
loss,

b. held-to-maturity investments;     

2011 2012 2013 2014 2015

c. loans and receivables;     

d. available-for-sale financial assets;     

e. financial liabilities at fair value through profit or     

f. financial liabilities measured at amortized cost     

5. Has the entity disclosed any information on fair     

designated loans and receivables

2011 2012 2013 2014 2015

6. Has the entity reclassified a financial     

asset at cost or amortized cost or at fair
value

4|Page
 7. Has the entity disclosed the amount     
reclassified into and out of each category
and the reason for that reclassification

8. Has the entity disclosed anything for     

each class of transferred financial assets
that are not derecognized in their
completeness

9. Has the entity disclosed

g. the carrying amount of financial assets it has     

pledge as collateral for liabilities or contingent
liabilities

2011 2012 2013 2014 2015

h. the terms and conditions relating to its     

pledge

10. When an entity holds collateral (of

financial or non-financial assets) and is
permitted to sell or re-pledge the collateral in
the absence of default by the owner of the
collateral, has the entity disclosed:

5|Page
a. the fair value of the collateral held;     

b. the fair value of any such collateral sold or re-     

pledged, and whether the entity has an obligation to
return it

c. the terms and conditions associated with its use of     

the collateral?

2011 2012 2013 2014 2015

11. If an entity has issued an instrument     

that contains both a liability and an equity
component, has the entity disclosed the
existence of those features

12.For loans payable recognized at the

end of the reporting period, has the entity
disclosed:

a. details of any defaults during the period of     

principal, interest, sinking fund, or redemption
terms of those loans payable;

b. the carrying amount of the loans payable in     

default at the end of the reporting period;

6|Page
c. whether the default was remedied, or the terms    

of the loans payable were renegotiated, before
the financial statement was authorized for issue?

2011 2012 2013 2014 2015

13.Has the entity disclosed the following items

of income, expense, gains or losses either on the
face of statement of comprehensive income or in
the notes:

a. net gains or net losses     

b. total interest income and total interest     

expense (calculated using the
effective interest method)

c. interest income on impaired financial assets     

accrued

d. the amount of any impairment loss for each     

class of financial asset?

7|Page
 2011 2012 2013 2014 2015

14. Has the entity disclosed, in the summary of     

significant accounting policies, the measurement
basis (or bases) used in preparing the financial
statement and the other accounting policies used
that are relevant to an understanding of the
financial statement

    
15. Has the entity disclosed for each class of
financial assets and financial liabilities the
fair value of that class of assets and liabilities
in a way that permits it to compare with its
carrying amount

16. Has the entity disclosed information that     

enables users of its financial statement to
evaluate the nature and extent of risks arising
from financial instruments to which the entity
is exposed at the end of the reporting period

17. For each type of risk arising from

financial instruments, has the entity
disclosed:

a. the exposures to risk and how they arise;     

8|Page
 2011 2012 2013 2014 2015

b. its objectives, policies and processes for     

managing the risk and the methods used to
measure the risk;

c.. any changes in (a) or (b) from the previous     

period

18. Has the entity disclosed summary of     

quantitative data about its exposure to that risk at
the end of the reporting period based on the
information provided internally to key
management personnel of the entity , for
example, the entity’s board of directors and chief
executive officer

19. Has the entity disclosed any information     

on credit risk by class of financial instrument

20. Has the entity disclosed any information     

on credit risk by class of financial assets

2011 2012 2013 2014 2015

21. Has the entity disclosed:

9|Page
a) a maturity analysis for financial liabilities that     
shows the remaining contractual maturities

b) a description of how it manages the liquidity     

risk inherent

22. Has the entity conducted or disclosed any     

sensitivity analysis information on market
risk

23. Has the entity disclosed anything on that     

fact and the reason it believes the sensitivity
analyses are unrepresentative when
sensitivity analysis is not done

Implementation 28 23 25 29 29

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 Auditors of MITHUN KNITTING

2011: A. MATIN & CO

2012:A. MATIN & CO

2013: A Matin & co.

2014:KAZI ZAHIR KHAN & CO

2015:KAZI ZAHIR KHAN & CO

MITHUN KNITTING

Credit Rating Report

Date of Valid Till Rating Long Term Outlook

Declaration Action Rating
Nov 27, Dec 29,
Surveillance A Stable
2016 2016

April 15, April 14, Surveillance AA Stable

2015 2016

ManagingDirector: Md. Hafiqul Haque

PaidupCapital: BDT 231,418,540million (As on june31,2015)

TotalAsset: BDT 746,567,934million (As on june31,2015)

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TotalLiabilities: BDT 74,656,79,34million (As on june31,2015)

 Mithun Knittinghas used both qualitative and quantitative disclosures in

years of 2011- 2015.

Recommendation:
the Financial Statements including consolidated financial statements, prepared in accordance with
Bangladesh financial Reporting Standards, give a true and fair view of the state of the company's
affairs as at 30th June, 2013 and of the results of its operations and its cash flows for the year then
ended and comply with the companies Act 1994, the Securities and Exchanges Rules 1987 and
other applicable laws and regulations.

According to the part Il of schedule Xl of the Companies Act 1994, the quantities of raw
materia's, purchase and stocks should be expressed in quantitative denomination also but, this
could not be done except the basic raw materials, cotton yarn (consumed 83.46%) as the
company deals in a large number of items as dyes & chemicals, spares. stores & accessories and
packing materials which again varies in multiple units and numerous forms.

Cash credit, secured against hypothecation of stocks collateralised by company's fixed assets was
sanctioned for one year and is usually renewable from year to year. The interest rate was 16.00
% p.a. quarterly rests as on 30th June, 2012 which is also subject to change from time to time by
the bank. The said loan was renewed up to 31 st October, 2014.

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 Financial instrument disclosure checklist
SQUARE TEXTILE
2011 2012 2013 2014 2015
1. Has an entity grouped financial instruments into classes √ √ √ √ √
according to the nature of the information disclosed and the
characteristics of those financial instruments
2. Has an entity provided sufficient information to permit √ √ √ √ √
reconciliation to the line items presented in the balance sheet
3. Has the entity disclosed information that enables users of its √ √ √ √ √
financial statements to evaluate the significance of financial
instruments to its financial position and performance
a. financial √ √ √ √ √
assets at fair
value through
profit or loss,

b. held-to- √ √ √ √ √
maturity
investments;

c. loans and √ × √ × √
receivables;

d. available-for- √ √ √ √ √
4. Have the carrying amounts of financial sale financial
assets at fair value through profit or loss assets;
been disclosed either on the face of the
Statement of Financial Position or in e. financial √ √ √ √ √
the notes liabilities at
fair value
through
profit or loss,

f. financial √ × × √ √
liabilities
measured at
amortized
cost

5. Has the entity disclosed any √ × √ × √

information on fair value of designated
loans and receivables

6. Has the entity reclassified a financial √ √ √ √ √

asset at cost or amortized cost or at fair
value

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7. Has the entity disclosed the amount reclassified into and out of × × × × ×
each category and the reason for that reclassification

8. Has the entity disclosed anything for each class of transferred × × × × ×

financial assets that are not derecognized in their completeness

a. the carrying √ √ √ √ √
amount of
financial
assets it has
pledge as
collateral for
9. Has the entity disclosed liabilities or
contingent
liabilities,
b. the terms and √ √ √ √ √
conditions
relating to its
pledge

a. the fair value √ √ √ √ √

of the
collateral
held;

b. the fair value √ √ √ √ √

of any such
collateral
10. When an entity holds collateral (of sold or re-
financial or non-financial assets) and is pledged, and
permitted to sell or re-pledge the whether the
collateral in the absence of default by entity has an
the owner of the collateral, has the obligation to
entity disclosed: return it;
c. The terms √ √ √ √ √
and
conditions
associated
with its use
of the
collateral?

11. If an entity has issued an instrument that contains both a liability √ √ √ √ √

and an equity component, has the entity disclosed the
existence of those features

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 a. details of any √ √ √ √ √
defaults
during the
period of
principal,
interest,
sinking fund,
or
redemption
terms of
those loans
payable;

b. the carrying √ √ √ √ √
amount of the
loans payable
in default at
12. For loans payable recognized at the end the end of the
of the reporting period, has the entity reporting
disclosed: period;

c. Whether the √ √ √ √ √
default was
remedied, or
the terms of
the loans
payable were
renegotiated,
before the
financial
statement
was
authorized
for issue?
√ √ √ √ √
a. net gains or
net losses

b. total interest √ √ √ √ √
13. Has the entity disclosed the following income and
items of total interest
income, expense, gains or losses either expense
on the face of statement of (calculated
comprehensive income or in the notes: using the
effective
interest
method) for
financial
assets or
financial
liabilities that

15 | P a g e
 are not at fair
value through
profit or loss;

c. interest × × × × ×
income on
impaired
financial
assets
accrued
d. The amount × × × × ×
of any
impairment
loss for each
class of
financial
asset?
14. Has the entity disclosed, in the summary of significant √ √ √ √ √
accounting policies, the measurement basis (or bases) used in
preparing the financial statement and the other accounting
policies used that are relevant to an understanding of the
financial statement
√ √ √ √ √
15. Has the entity disclosed for each class of financial assets and
financial liabilities the fair value of that class of assets and
liabilities in a way that permits it to compare with its carrying
amount
16. Has the entity disclosed information that enables users of its √ √ √ √ √
financial statement to evaluate the nature and extent of risks
arising from financial instruments to which the entity is exposed
at the end of the reporting period
a. the exposures √ × √ √ √
to risk and
how they
arise;
b. its objectives, √ √ √ √ √
policies and
processes for
17. For each type of risk arising from managing the
financial instruments, has the entity risk and the
disclosed: methods used
to measure
the risk;
c. any changes √ × √ √ √
in (a) or (b)
from the
previous
period

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18. Has the entity disclosed summary of quantitative data about its √ × √ √ √
exposure to that risk at the end of the reporting period based on
the information provided internally to key management
personnel of the entity , for example, the entity’s board of
directors and chief executive officer
19. Has the entity disclosed any information on credit risk by class √ √ √ √ √
of financial instrument
20. Has the entity disclosed any information on credit risk by class √ √ √ √ √
of financial assets
a. a maturity √ √ √ √ √
analysis for
financial
liabilities that
shows the
remaining
21. Has the entity disclosed: contractual
maturities
b. a description √ √ √ √ √
of how it
manages the
liquidity risk
inherent
22. Has the entity conducted or disclosed × × × × ×
any sensitivity analysis information on
market risk
23. Has the entity disclosed anything on × × × × ×
that fact and the reason it believes the
sensitivity analyses are unrepresentative
when sensitivity analysis is not done

Implementation 32 25 23 29 29

*In here 2015 is highly disclosed and in 2012 is in lowest disclosed.

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 Data analysis& findings

On

Saiham Industries Limited

Disclosers 2012 2013 2014 2015 2016

1. Has an entity grouped financial instruments √ √ √ √ √

into classes according to the nature of the
information disclosed and the characteristics of
those financial instruments

2 Has an entity provided sufficient information √ √ √ √ √

to permit reconciliation to the line items
presented in the balance sheet

3 Has the entity disclosed information that √ √ √ √ √

enables users of its financial statements to
evaluate the significance of financial
instruments to its financial position and
performance

4 Have the carrying amounts of financial assets

at fair value through profit or loss been
disclosed either on the face of the Statement of
Financial Position or in the notes √ × √ √ ×
a)financial assets at fair value through profit or
loss, √ × √ √ ×
b)held-to-maturity investments;
c)loans and receivables; √ × √ √ ×
d)Available-for-sale financial assets;
e)financial liabilities at fair value through √ × √ √ ×
profit or loss,
f)financial liabilities measured at amortized √ × √ √ ×
cost

5 Has the entity disclosed any information on × × × × ×

fair value of designated loans and receivables

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6 Has the entity reclassified a financial asset at √ √ √ √ √
cost or amortized cost or at fair value

7.Has the entity disclosed the amount × × × × ×

reclassified into and out of each category and
the reason for that reclassification

8.Has the entity disclosed anything for each × × × × ×

class of transferred financial assets that are not
derecognized in their completeness

9.Has the entity disclosed

A)the carrying amount of financial assets it has √ √ √ √ √
pledge as collateral for liabilities or
contingent liabilities,
b) the terms and conditions relating to its √ √ √ √ √
pledge

10. When an entity holds collateral (of

financial or non-financial assets) and is
permitted to sell or re-pledge the collateral in
the absence of default by the owner of the
collateral, has the entity disclosed: √ √ √ √ √
a. the fair value of the collateral held;
b. the fair value of any such collateral sold or √ √ √ √ √
re-pledged, and whether the entity has an
obligation to return it; and √ √ √ √ √
c. the terms and conditions associated with its
use of the collateral?

11. If an entity has issued an instrument that √ √ √ √ √

contains both a liability and an equity
component, has the entity disclosed the
existence of those features

12.For loans payable recognized at the end of

the reporting period, has the entity disclosed:
a. details of any defaults during the period of
principal, interest, sinking fund, or redemption √ √ √ √ √
terms of those loans payable;
b. the carrying amount of the loans payable in
default at the end of the reporting period; and √ √ √ √ √
c. whether the default was remedied, or the
terms of the loans payable were renegotiated, √ √ √ √ √
before the financial statement was authorized
for issue?

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13. Has the entity disclosed the following √ √ √ √ √
items of income, expense, gains or losses
either on the face of statement of
comprehensive income or in the notes:

a. net gains or net losses √ √ √ √ √

b.total interest income and total interest √ √ √ √ √

expense (calculated using the effective interest
method) for financial assets or financial
liabilities that are not at fair value through
profit or loss;

c. interest income on impaired financial assets × × × × ×

accrued

d. the amount of any impairment loss for each × × × × ×

class of financial asset?
14. Has the entity disclosed, in the summary of √ × √ √ √
significant accounting policies, the
measurement basis (or bases) used in preparing
the financial statement and the other
accounting policies used that are relevant to an
understanding of the financial statement

15. Has the entity disclosed for each class of √ × √ × ×

financial assets and financial liabilities the fair
value of that class of assets and liabilities in a
way that permits it to compare with its
carrying amount

20 | P a g e
16. Has the entity disclosed information that √ √ √ √ √
enables users of its financial statement to
evaluate the nature and extent of risks arising
from financial instruments to which the entity
is exposed at the end of the reporting period

17. For each type of risk arising from financial

instruments, has the entity disclosed:
a. the exposures to risk and how they arise; √ × √ √ √

b. its objectives, policies and processes for

managing the risk and the methods used to √ × √ √ √
measure the risk;
c. any changes in (a) or (b) from the previous
period √ √ × × ×

18. Has the entity disclosed summary of × × × × ×

quantitative data about its exposure to that risk
at the end of the reporting period based on the
information provided internally to key
management personnel of the entity , for
example, the entity’s board of directors and
chief executive officer

19 Has the entity disclosed any information on √ √ √ √ √

credit risk by class of financial instrument

20 Has the entity disclosed any information on √ √ √ √ √

credit risk by class of financial assets

21. Has the entity disclosed:

a) a maturity analysis for financial liabilities × × × × ×
that shows the remaining contractual maturities

b) a description of how it manages the √

liquidity risk inherent √ √ √ √

22 Has the entity conducted or disclosed any √ √ √ √ √

sensitivity analysis information on market risk

23. Has the entity disclosed anything on that √ √ √ √ √

fact and the reason it believes the sensitivity
analyses are unrepresentative when sensitivity
analysis is not done

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Auditors of Saiham Textile industries limited:

2012: MalekSiddique

2013:MlekSidduque

2014: M K Rahman

2015:FayzulHaque

2016:FayzulHaque

Recommendation

The board of directors of Saiham Textile Mills Limited has recommended cash dividend at 15
per cent for the year ended on June 30, 2011, a company announcement said on Monday. The
Board has also recommended for issuance of rights share at 2R:1 (i.e. 2 rights share for 1
existing share) of BDT 10.00 each at an issue price of BDT 25.00 per share (including a
premium of BDT 15.00 each) subject to the approval of Extraordinary General Meeting (EGM)
and regulatory authorities. The fund will be utilized for expansion of the existing unit by setting
up new 100 percent export oriented Melange Spinning Mill to increase turnover and profit
substantially. Date of Annual General Meeting (AGM) and EGM: 09.10.11, time of AGM and
EGM: 11:00 AM and 12:00 noon respectively. Both the meeting will be held at mill premises,
Noyapara, Madhabpur in Habiganj. Record date for AGM and EGM: 14.09.11. The company has
also reported EPS of BDT 3.31, NAV per share of BDT 13.74 and NOCFPS of BDT 2.44 for the
year ended on June 30, 2011.

22 | P a g e
 Data Analysis & Findings
On
SAFKO Spinning Mills Ltd

Disclosers 2011 2012 2013 2014 2015

24. Has an entity grouped financial instruments into classes √ √ √ √ √
according to the nature of the information disclosed and the
characteristics of those financial instruments
25. Has an entity provided sufficient information to permit √ √ √ √ √
reconciliation to the line items presented in the balance sheet
26. Has the entity disclosed information that enables users of its √ √ √ √ √
financial statements to evaluate the significance of financial
instruments to its financial position and performance
g. financial √ √ √ √ √
assets at fair
value through
profit or loss,
h. held-to- × × × × ×
maturity
investments;
i. loans and √ √ √ √ √
receivables;
27. Have the carrying amounts of financial
assets at fair value through profit or loss j. available-for- × × × × ×
been disclosed either on the face of the sale financial
Statement of Financial Position or in assets;
the notes k. financial × × √ √ ×
liabilities at
fair value
through
profit or loss,
l. financial √ √ × √ √
liabilities
measured at
amortized
cost
28. Has the entity disclosed any × × × × ×
information on fair value of designated
loans and receivables
29. Has the entity reclassified a financial √ × √ √ √
asset at cost or amortized cost or at fair
value
30. Has the entity disclosed the amount reclassified into and out of × × × × ×
each category and the reason for that reclassification
31. Has the entity disclosed anything for each class of transferred × × × × ×

23 | P a g e
 financial assets that are not derecognized in their completeness

c. the carrying √ √ √ √ √
amount of
financial
assets it has
pledge as
collateral for
32. Has the entity disclosed liabilities or
contingent
liabilities,

d. the terms and √ √ √ √ √

conditions
relating to its
pledge

d. the fair value √ √ √ √ √

of the
collateral
held;

e. the fair value √ √ √ √ √

of any such
collateral
33. When an entity holds collateral (of sold or re-
financial or non-financial assets) and is pledged, and
permitted to sell or re-pledge the whether the
collateral in the absence of default by entity has an
the owner of the collateral, has the obligation to
entity disclosed: return it;
f. the terms and √ √ √ √ √
conditions
associated
with its use
of the
collateral?
34. If an entity has issued an instrument that contains both a liability √ √ √ √ √
and an equity component, has the entity disclosed the
existence of those features

24 | P a g e
 d. details of any × × × × ×
defaults
during the
period of
principal,
interest,
sinking fund,
or
redemption
terms of
those loans
payable;

e. the carrying × × × × ×
amount of the
loans payable
in default at
the end of the
reporting
period;

35. For loans payable recognized at the end

of the reporting period, has the entity f. Whether the × × × × ×
disclosed: default was
remedied, or
the terms of
the loans
payable were
renegotiated,
before the
financial
statement
was
authorized
for issue?

25 | P a g e
 √ √ √ √ √
e. net gains or
net losses

f. total interest √ √ √ √ √
income and
total interest
expense
(calculated
using the
effective
interest
method) for
financial
36. Has the entity disclosed the following assets or
items of financial
income, expense, gains or losses either liabilities that
on the face of statement of are not at fair
comprehensive income or in the notes: value through
profit or loss;

g. interest × × × × ×
income on
impaired
financial
assets
accrued
h. the amount of × × × × ×
any
impairment
loss for each
class of
financial
asset?
37. Has the entity disclosed, in the summary of significant √ √ √ √ √
accounting policies, the measurement basis (or bases) used in
preparing the financial statement and the other accounting
policies used that are relevant to an understanding of the
financial statement

√ √ × × √
38. Has the entity disclosed for each class of financial assets and
financial liabilities the fair value of that class of assets and
liabilities in a way that permits it to compare with its carrying
amount

39. Has the entity disclosed information that enables users of its – – – √ √
financial statement to evaluate the nature and extent of risks
arising from financial instruments to which the entity is exposed
at the end of the reporting period

26 | P a g e
 d. the exposures – – – √ √
to risk and
how they
arise;
e. its objectives, – – – √ √
policies and
processes for
40. For each type of risk arising from managing the
financial instruments, has the entity risk and the
disclosed: methods used
to measure
the risk;
f. any changes – – – × ×
in (a) or (b)
from the
previous
period
41. Has the entity disclosed summary of quantitative data about its – – – √ √
exposure to that risk at the end of the reporting period based on
the information provided internally to key management
personnel of the entity , for example, the entity’s board of
directors and chief executive officer

42. Has the entity disclosed any information on credit risk by class – – – √ √
of financial instrument

43. Has the entity disclosed any information on credit risk by class – – – √ √
of financial assets
c. a maturity – – – × ×
analysis for
financial
liabilities that
shows the
44. Has the entity disclosed: remaining
contractual
maturities
d. a description – – – √ √
of how it
manages the
liquidity risk
inherent
45. Has the entity conducted or disclosed – – – √ ×
any sensitivity analysis information on
market risk
46. Has the entity disclosed anything on – – – × ×
that fact and the reason it believes the
sensitivity analyses are unrepresentative
when sensitivity analysis is not done

27 | P a g e
Total 15 16 16 25 24

Auditor(s) Name Malek Malek Malek Rahman Rahman

Siddiqui Siddiqui Siddiqui Mostafa Mostafa
Wali Wali Wali Alam & Alam &
Co Co
Credit Rating Status

*From 2011-2013 there is some missing reports and statements, so some disclosers are not given in this
years.

Disclosers

25

20

15
Disclosers
10

0
2011 2012 2013 2014 2015

Interpretation:In 2014 there is highly disclosed and in 2011 there is lowest disclosed.

28 | P a g e
 Data analysis & findings
On
Zahintex Industries Limited
Disclosers 2016 2015 2014 2013 2012

1. Has an entity grouped financial instruments into √ √ √ √ √

classes according to the nature of the information
disclosed and the characteristics of those financial
instruments

2 Has an entity provided sufficient information to √ √ √ √ √

permit reconciliation to the line items presented in
the balance sheet

3 Has the entity disclosed information that enables √ √ √ √ √

users of its financial statements to evaluate the
significance of financial instruments to its
financial position and performance

4 Have the carrying amounts of financial assets at

fair value through profit or loss been disclosed
either on the face of the Statement of Financial
Position or in the notes
a)financial assets at fair value through profit or × × × ×
loss, √ × √ √
b)held-to-maturity investments; × × × ×
c)loans and receivables; √ × √ √
d)Available-for-sale financial assets; × × × ×
e)financial liabilities at fair value through profit or √ × √ √
loss,
f)financial liabilities measured at amortized cost

5 Has the entity disclosed any information on fair √ √ √ √ √

value of designated loans and receivables

6 Has the entity reclassified a financial asset at √ √ √ √ √

cost or amortized cost or at fair value

7.Has the entity disclosed the amount reclassified × × × × ×

into and out of each category and the reason for
that reclassification

29 | P a g e
8.Has the entity disclosed anything for each class × × × × ×
of transferred financial assets that are not
derecognized in their completeness

9.Has the entity disclosed

A)the carrying amount of financial assets it has √ √ √ √ √
pledge as collateral for liabilities or contingent
liabilities,
b) the terms and conditions relating to its pledge √ √ √ √ √

10. When an entity holds collateral (of financial or

non-financial assets) and is permitted to sell or re-
pledge the collateral in the absence of default by
the owner of the collateral, has the entity
disclosed: √ √ √ √ √
a. the fair value of the collateral held;
b. the fair value of any such collateral sold or re- √ √ √ √ √
pledged, and whether the entity has an obligation
to return it; and √ √ √ √ √
c. the terms and conditions associated with its use
of the collateral?

11. If an entity has issued an instrument that √ √ √ √ √

contains both a liability and an equity component,
has the entity disclosed the existence of those
features

12.For loans payable recognized at the end of the

reporting period, has the entity disclosed:
a. details of any defaults during the period of
principal, interest, sinking fund, or redemption √ √ √ √ √
terms of those loans payable;
b. the carrying amount of the loans payable in
default at the end of the reporting period; and √ √ √ √ √
c. whether the default was remedied, or the terms
of the loans payable were renegotiated, before the √ √ √ √ √
financial statement was authorized for issue?

13. Has the entity disclosed the following items of

income, expense, gains or losses either on the face
of statement of comprehensive income or in the
notes:

30 | P a g e
a. net gains or net losses √ √ √ √ √

b.total interest income and total interest expense √ √ √ √ √

(calculated using the effective interest method) for
financial assets or financial liabilities that are not
at fair value through profit or loss;

c. interest income on impaired financial assets × × × × ×

accrued

d. the amount of any impairment loss for each × × × × ×

class of financial asset?
14. Has the entity disclosed, in the summary of √ × √ √ √
significant accounting policies, the measurement
basis (or bases) used in preparing the financial
statement and the other accounting policies used
that are relevant to an understanding of the
financial statement

15. Has the entity disclosed for each class of √ × √ × ×

financial assets and financial liabilities the fair
value of that class of assets and liabilities in a way
that permits it to compare with its carrying amount

16. Has the entity disclosed information that √ √ √ √ √

enables users of its financial statement to evaluate
the nature and extent of risks arising from
financial instruments to which the entity is
exposed at the end of the reporting period

17. For each type of risk arising from financial

instruments, has the entity disclosed:
a. the exposures to risk and how they arise; √ × √ √ √

b. its objectives, policies and processes for

managing the risk and the methods used to √ × √ √ √
measure the risk;
c. any changes in (a) or (b) from the previous
period √ √ × × ×

31 | P a g e
18. Has the entity disclosed summary of √ √ √ √ √
quantitative data about its exposure to that risk at
the end of the reporting period based on the
information provided internally to key
management personnel of the entity , for example,
the entity’s board of directors and chief executive
officer

19 Has the entity disclosed any information on √ √ √ √ √

credit risk by class of financial instrument

20 Has the entity disclosed any information on √ √ √ √ √

credit risk by class of financial assets

21. Has the entity disclosed:

a) a maturity analysis for financial liabilities that × × × × ×
shows the remaining contractual maturities

b) a description of how it manages the liquidity √

risk inherent √ √ √ √

22 Has the entity conducted or disclosed any √ √ √ √ √

sensitivity analysis information on market risk

23. Has the entity disclosed anything on that fact × × × × ×

and the reason it believes the sensitivity analyses
are unrepresentative when sensitivity analysis is
not done

Auditors of zahintex industries limited

2012: ACNABIN

2013: ACNABIN

2014: Amal & Leena

2015:MahfelHuq& co.

2016:Mahfelhuq&co.

32 | P a g e
Credit Rating on Zahintex
In 2016,

National Credit Rating Limited has announced the surveillance rating of the company as A- in
the long term based on audited financial statements of the company.(Source from SHANTA
securities).

In 2015, not given

In 2014.

National Credit Ratings Limited (NCR) has assigned the surveillance rating of the Company as
"A" in the long term based on audited financial statements of the Company up to June 30,
2014.(from LANKABD.COM)

In 2013.not given

In 2012, not given

Recommendation:
Zahintex industries limited manage its overall performance in a good manner but still there have
some scope for improvement their management that is given below:

 Zahintex industries ltd should provide sufficient information about maturity analysis for
financial liabilities that shows the remaining contractual maturities, each class of
transferred financial assets and default loan.
 Company can maintain a positive public image for service standard.
 Company must expand their target market by identifying and providing responsive
service
 This company can use effective interest method for calculating the interest income
interest expense.

33 | P a g e
Conclusion

The accounting standard IFRS 7 requires entities to provide disclosures in their financial
statements that enable users to evaluate the significance of financial instruments, the nature and
extent of risks arising from them and how entities manage those risks. Find articles, books and
online resources providing quick links to the standard, summaries, guidance and news of recent
developments. IFRS helps a company to make its accounts comparable, trustable and
comprehensible. There are two Types of financial instruments (1) Cash instruments (2)
Derivative instruments. The accounting loss the entity would incur if any party to the financial
instrument failed completely to perform according to the terms of the contract and the collateral
or other security, if any, for the amount due proved to be of no value to the entity. The entity's
policy for requiring collateral or other security on financial instruments it accepts and a
description of collateral on instruments presently held.

Reference

1. http://textile.squaregroup.com/tex_financialStat.html
2. https://drive.google.com/file/d/0B1q7teBkioAAem53NmVWV3B5bn
3. https://drive.google.com/file/d/0B1q7teBkioAAS3J1bEdXUHMxN3M
4. https://drive.google.com/file/d/0B1q7teBkioAASE1BVUdpWE9XMVE
5. https://drive.google.com/file/d/0B1q7teBkioAAem53NmVWV3B5bnc
6. http://lankabd.com/homepage

34 | P a g e