IAI Actuarial Core Principles · Business Finance · Regulation of financial reporting of incorporated entities
Which statement about consolidated financial statements under the Companies Act 2013 is correct?
A company with subsidiaries, associates or joint ventures must prepare consolidated financial statements as well as its own standalone statements, subject to prescribed exemptions. This applies whether or not it is listed, includes associates and joint ventures, and does not depend on any auditor request.
- AOnly listed holding companies must prepare consolidated statements
- BA company with one or more subsidiaries, associates or joint ventures must prepare consolidated financial statements in addition to its standalone statements, subject to prescribed exemptionsCorrect
- CConsolidated statements replace standalone statements, which need not then be prepared
- DConsolidation applies only to subsidiaries and never to associates
- Consolidated statements are prepared only when the auditor requests them
Explanation
The Act requires a company having subsidiaries, associates or joint ventures to prepare consolidated statements in the same form and manner as its own, and lay them before the annual general meeting along with its standalone statements. Exemptions exist, such as certain wholly owned or intermediate holding situations. Consolidation covers associates and joint ventures, and it supplements rather than replaces standalone accounts.
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