New Amendments Will Clarify Debts and Liabilities as Current or Non-current
The CFS documents are in addition to the Separate Financial Statements (SFS) that companies must also prepare. This is applicable if your company one or more associates, joint ventures or subsidiaries. 3E Accounting can assist with the preparation of your financial documents.
It is the duty of the parent company to prepare the consolidated account statements. If your company does not have a subsidiary but you have joint ventures and/or associates, you must still prepare a consolidated statement. These documents must be prepared per the Accounting Standard 23, Accounting for Associates in Consolidated Financial Statements and Accounting Standard 27 and Financial Reporting of Interests in Joint Ventures respectively.
Why Do You Need Consolidated Accounts in India?
CFS help to align your reporting requires to the international reporting practice requirements. Standalone financial statements are not enough to represent an accurate full picture of your company’s finances. Mandating these statements is a move by the Government towards greater transparency.
The Government is endeavouring to raise compliance standards. It requires all companies in India to prepare these documents as a way of obtaining a true and fair view of a company’s reporting position. The CFS is considered your business’s primary financial statements.
What Do These Accounts Involve?
Your consolidated accounts in India include consolidated statements of the following:
- Balance sheet
- Profit and loss statement
- Notes and explanatory material
- Cash flow statement
What Are the Compliance Requirements Involved?
Your consolidated documents and statements must be prepared and presented at the Annual General Meeting (AGM). Audited statements of the listed companies and their subsidiaries must be available on the website.
All your subsidiaries must have their accounts audited. These audited reports must be prepared ahead of time and be available upon request. The following steps must be taken when preparing your consolidated statements:
- Combine parent company’s financial statements and subsidiaries line by line. Similar items should be totalled together (eg: Income, expenses, assets, liabilities)
- Eliminate how much investments made in each subsidiary have cost the parent company.
- Additional costs to the parent company are to be recognised as an asset in the statements.
- If the subsidiary investment cost is lower than the share of the parent company, the difference in price is treated as capital reserve.
- If a consolidated subsidiary has a portion of minority interests in its net income during the reporting period, this must be adjusted against the group income. It will be attributed to the owners of the parent company.
Need Help Consolidating Your Accounts?
Preparing your accounting and balance sheets can be a headache. Especially when you’re not used to the accounting and reporting process. That’s what we are here for, to help make your life easier. Let our professional accounting experts handle all your consolidated accounting needs in India so you don’t have to worry about it. For more information, contact our team today.