Applicability of accounting standard 21

Dear NGA,

Consolidated Financial Statements (CFS) are prepared due to applicability of Section 212 of the Companies Act, 1956. AS 21 -  Consolidated Financial Statements does not mandate preparation of CFS, it only make mandatory the procedure to be followed while preparing the same.

As per your query, all Accounting Standards are applicable on Companies (including AS -21). But preparation of CFS depends upon Section 212 of Companies Act 1956. If the company in question has obtained exemption under section 212(8) of the Companies Act from the Central Government, then only it can enjoy the remedy available against preparation of CFS. Otherwise, all other Companies, registered under Companies Act by Virtue of the above mentioned section, are required to prepare Consolidated Financial Statement by following the method / procedure as per Accounting Standard - 21.