Page 147 - Pakistan Oilfield Limited - Annual Report 2022

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Annual Report 2022

Other than the aforesaid standards, interpretations and amendments, IASB has also issued the
following standards and interpretation, which have not been notified locally or declared exempt
by the SECP as at June 30, 2022:

- IFRS 1 (First Time Adoption of International Financial Reporting Standards)
- IFRS 17 (Insurance Contracts)
- IFRIC 12 (Service concession arrangements)
3.3 The Securities and Exchange Commission of Pakistan (SECP) through S.R.O. 1177 (I)/2021 dated
September 13, 2021, in partial modification of its previous S.R.O. 985(1)/2019 dated September 2,
2019, has notified that in respect of companies holding financial assets due from the Government
of Pakistan (GoP) in respect of circular debt, the requirements contained in IFRS 9 with respect
to application of expected credit loss (ECL) model shall not be applicable till June 30, 2022,
provided that such companies shall follow relevant requirements of IAS 39 'Financial Instruments:
Recognition and Measurement' in respect of above referred financial assets during the exemption
period. The Company has assessed that the above does not have any significant impact on its
financial statements.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Basis of measurement
These financial statements have been prepared under the historical cost convention except as
otherwise disclosed in the respective accounting policy notes.
4.2 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been identified
as the Board of Directors that makes strategic decisions. The management has determined that
the Company has a single reportable segment as the Board of Directors views the Company's
operations as one reportable segment.
4.3 Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic
environment in which the Company operates. The financial statements are presented in Pakistan
Rupees, which is the Company's functional currency.
4.4 Foreign currency transactions and translation

Transactions in foreign currencies are recorded at the rates of exchange ruling on the date of
transaction. All assets and liabilities in foreign currencies are translated into rupees at the rates of
exchange ruling on the date of the statement of financial position. Exchange differences are dealt
with through the statement of profit or loss.
4.5 Taxation

Provision for current taxation is based on taxable income at applicable tax rates, adjusted for
royalty payments to the Government.

Deferred tax is accounted for on all temporary differences using the liability method. Deferred
tax liability has been calculated at the estimated effective rate of 32% (2021: 30%) after taking
into account availability of future depletion allowance and set off available in respect of royalty
payments to the Government.