RE: IDIOTS GUIDE TO Yesterday RNS30 Apr 2024 10:32
Don't Forget what the Accounts say about the AVO's....
And ANY PERSON PUTTING UP A ...APB or PGB will want total Clarity on this ISSUE........
The Recognition of assessed variation orders (AVOs) pending customer approval: an AVO is a management estimate of payment due from the customer resulting from a customer-instructed change in the contractual scope of work or for the reimbursement of costs not included in the contract price. The assessment for contract modification is based on discussions with the customer and a range of factors, including contractual entitlement, prior experience of the customer and of similar contracts with other customers. When such modifications or changes to contract are approved in writing, by oral agreement or implied by customary business practices including where the parties have yet to reach final agreement on changes in scope or pricing (or both) but where the Group believes it has an enforceable right to payment, the Group recognises revenues and profit from AVOs using the expected value approach. It assesses/reassesses AVOs at contract inception and at each reporting date where it is considered highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the AVO is subsequently resolved. In performing the assessment, management considers the likelihood of any such resolution being made by reference to the contract, independent specialist advice, customer communications, past experience with the customer and other forms of documentary evidence. At of 31 December 2022, AVOs of US$378m
were recognised in the consolidated balance sheet (2021: US$338m), of which US$372m (2021: US$337m) was included within the contract assets; and US$6m (2021: US$1m) was included as an offset against contract liabilities; see note 20.
Accountan Speak............Important Bit.......
“Where AVOs pending customer approval are not subsequently resolved in the Group’s favour, this could result in reductions to, or reversals of, previously recognised revenue. The AVOs recorded in the financial statements are in respect of a number of contracts, with AVOs relating to two contracts representing approximately half of the total balance recorded. "
On paper there is a lot of Money Not Settled or approved with Clients……..At of 31 December 2022, AVOs of US$378m……Outwith Legacy Contracts
Auditors will be holding PFC Feet to the FIRE on this as this is the Basis of the BIG BLACK HOLE.........
And as the Auditors stated PFC have a History of Fraud and Bribery and Corruption do you blame the Auditors for being Diligent
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