IFRS 10 Consolidated Financial Statement

AS 287 views 2 replies

Jayanta Bandyopadhyay

394 Points Joined June 2021

We are Unlisted Public Ltd Co, having a wholly owned subsidiary in Mauritius. That subsidiary has 2 subsidiaries and one wholly owned subsidiary in Mauritius. All these step down subsidiaries are making losses. However, our WOS based in Mauritius are not consolidating those loss making subsidiaries as per IFRS 10-CFS. Thus our Indian parent's books of accounts do not capture those step down subsidiaries except the main subsidiary. Is it violatibe?

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9456 Points Joined December 2011

The scenario you described raises questions regarding accounting standards and compliance. IFRS 10 Consolidated Financial Statements (CFS) requires a parent company to consolidate financial statements of its subsidiaries, including step-down subsidiaries, if it controls them. If your wholly-owned subsidiary (WOS) in Mauritius is not consolidating the financial statements of its subsidiaries (the loss-making step-down subsidiaries), it may be a violation of IFRS 10. Additionally, if your Indian parent company is not capturing the financial statements of the step-down subsidiaries in its books of accounts, it may also be a violation of accounting standards. However, without knowing more specific details, it's difficult to provide a definitive answer. It's recommended that you consult with a qualified chartered accountant or financial advisor to ensure compliance with accounting standards and regulatory requirements. Some possible questions to consider: - Does your WOS in Mauritius have control over the step-down subsidiaries? - Are the step-down subsidiaries material to the financial statements of your WOS or the Indian parent company? - Have you sought any exemptions or relief from consolidation requirements? - Are there any specific accounting or regulatory requirements in Mauritius or India that may apply? Please consult a qualified professional to ensure compliance and accuracy in your financial reporting.

Jayanta Bandyopadhyay

394 Points Joined June 2021

Thanks.Sir.

Yes. Our WOS in Mauritius has full control over all step down subsidiaries. All SDS are loss making. They have eaten up about 30% NW of WOS. Since parent company remits all funds to WOS, ultimately it has ramification down the line.

Surprisingly, all directos are common- Directors of Parent Company of India are on also on the boards of all subsidiaries.

While foreign auditor gives a casual note in report, my reading is that Indian audit firms are not much alive. NFRA is yet to control ICAI.

Considering certain issues, seeking your guidance on this.

Regards,