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06/12/2023
Punjab Govt orders Audit of 19,000 Co-op Societies across State
21,791 fake GST registrations, suspected tax evasion of Rs 24,000 Cr detected in special drive
05/12/2023
Indian Banks write off Rs.10.6 Lakh Cr in 5 years, 50% linked to Large Corporates
NFRA has Superior Powers over ICAI for Professional Misconduct - NCLAT
03/12/2023
Investment firm BlackRock stake in Suzlon Energy surpasses 5% level
30/11/2023
Cabinet approves Terms of Reference for the Sixteenth Finance Commission
GSTN Advisory for the procedures and provisions related to the GST Amnesty Scheme
29/11/2023
Income tax Department introduces new ‘Discard ITR’ facility on Income Tax Website
Delhi HC imposes Rs 2 lakh fine on ex-Bharat Pe MD Ashneer Grover for derogatory posts
 
 
  Notification/Circulars
17/11/2023
Regulatory measures towards consumer credit and bank credit to NBFCs
09/11/2023
‘Fully Accessible Route’ for Investment by Non-residents in Government Securities – Inclusion of Sovereign Green Bonds
08/11/2023
RBI Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices
01/11/2023
Regulation of Payment Aggregator – Cross Border (PA - Cross Border)
31/10/2023
Banking Regulation (Amendment) Act 2020 - Change in Name of Co-operative Banks
Guidelines on Closure of Branches and Extension Counters by DCCBs - RBI
Article Details
Consolidation of accounts for private limited companies
It is believed that to get correct picture of financials of a business, the financials of the subsidiaries & joint ventures of the company should be analyzed together. On this premise the concept of consolidation of accounts is devised & is the part of GAAP.  In the previous companies Act, there was no legal requirement of consolidation of accounts by a company. However as per listing agreement, the listed companies were required to consolidate their accounts along with subsidiaries
To ensure transparency & facilitate disclosure of clear & refined picture of the state of affairs of companies, the companies Act, 2013 made mandatory, the preparation of consolidated financial statements of all the subsidiaries , beside presenting its own financial statement.
The Ministry of corporate affairs had issued a couple of amendments to provide that preparation of consolidated financial statements shall not be required by:
  • An intermediate wholly owned subsidiary, other than a wholly owned subsidiary whose immediate parent is a company incorporated outside India.
  • A company which does not have a subsidiary or subsidiaries but has one or more associate companies or joint ventures or both for the financial year 2014-15.
 
More recently, on 16 January 2015, the Ministry of corporate Affairs issued another amendment which provided that “the requirements in respect of consolidation of financial statement shall not apply to a company having subsidiary or subsidiaries incorporated outside India only for the financial year commencing on or after 1st April, 2014”.
From the above amendment it appears that the MCA has given a temporary relief to companies having foreign subsidiaries. This is being provided to such companies to deal with the additional challenges in consolidation due to differences in accounting framework and reporting period followed by their subsidiaries.
From plain reading of this amendment it can be concluded that as a temporary relief, the companies having foreign subsidiaries are not required to consolidate the accounts of their foreign subsidiaries, but they are required to consolidate the accounts of Indian subsidiaries.
Having said this, as a matter of fact all the companies who are required to consolidate their accounts should start the process of consolidating them as early as possible since these requirements may require significant time & cost especially in case of large & mid-sized unlisted companies.