Accounting consolidating statements
Applicability of Consolidated Financial Statement (CFS): Objective of CFS: The Concept of CFS was brought with an objective of achieving the true and fair view of reporting the position of the company for the financial year, since the consolidated financial Statements are generally considered as the primary financial statements from an economic entity perspective, whereas the standalone Financial Statements projects only the position of the company in its individual performance and it does not provide the true and fair view to the shareholders about the overall performance of the company with its subsidiaries.Synopsis: Currently listed companies which are having subsidiary companies (Associate or Joint Venture is not included in the definition of Subsidiary Company) are required to prepare the consolidated financial statements under the Securities and Exchange Board of India (SEBI) Regulations.Now the CA, 2013 mandates every Listed, unlisted public and private limited companies to prepare consolidated financial statements which are having subsidiary companies as defined under Section 2(8 7) of the Companies Act, 2013, which includes Associate Company and Joint Venture (Both in India and Abroad).
Transactions like these will appear on stand-alone financial statements because they affect the profitability of the individual units, which is important for internal bookkeeping and evaluation.This standard establishes the fieldwork and reporting standards applicable to an audit of internal control over financial reporting. The auditor should use the same suitable, recognized control framework to perform his or her audit of internal control over financial reporting as management uses for its annual evaluation of the effectiveness of the company's internal control over financial reporting. The audit of internal control over financial reporting should be integrated with the audit of the financial statements.The objectives of the audits are not identical, however, and the auditor must plan and perform the work to achieve the objectives of both audits. In an integrated audit of internal control over financial reporting and the financial statements, the auditor should design his or her testing of controls to accomplish the objectives of both audits simultaneously - 8.Obtaining sufficient evidence to support control risk assessments of low for purposes of the financial statement audit ordinarily allows the auditor to reduce the amount of audit work that otherwise would have been necessary to opine on the financial statements.( Note: In some circumstances, particularly in some audits of smaller and less complex companies, the auditor might choose not to assess control risk as low for purposes of the audit of the financial statements.