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No. 62. CAMI/CFS Check list/22-2014 saveen & Fredseearerirenretiare wer erator OFFICE OF THE COMPTROLLER & 9, a xara saan Hr, ‘AUDITOR GENERAL OF INDIA 9, DEENDAYAL UPADHYAYA MARG, vat fee-110 124 NEW DELHI - 110 124 fertn /oare_Zo-eB- 2015 To, DAI (RC & LB), al (DCR) ALL ADAIS DG (P&T), DG (Railways) All MsAB & PD(ESM) Sub: Audit of Consolidated Financial Statements Sir/Madam, In continuation of Hars. letter No CA-II/38-2006/97 dated 27 May 2014 and No (CA./27-2014/17 dated 20 March 2014 wherein the formats of certificate for issue of ‘comments and clarifications on taking up audit of Consolidated Financial Statements were issued, please find enclosed the guidance note and the checklist for the audit 2. Since the provisions for audit of Consolidated Financial Statements are applicable with effect from 1 April 2014 i.e. financial year 2014-15, necessary steps may be initiated by us for conducting the smooth audit of Consolidated Financial Statements. 3. This issues with the approval of DAI(C) Yours faithfully, -é 71(P. Sesh Kumar) Director General (Commi) Pee hag PDCA/MAL-I, Mumbat fi, ohh ee Una Me ATR A, SIEM CBO [ibaide tel Pana Wie eo Souter gel seta sire a1 9) A Aagutereeabhiags rte eh a} ae uit > Seliger 1h aap & 2 apa eats Atelier (eh OY NE bats a Re dinhirsoes Howat a wT halite tier ieee i the pa Hetet cpa Audit of Consolidated Financial Statements G1 [introduction Corporate financial reporting and disclosures play a crucial role in bringing transparency in the functioning of an enterprise thereby improving its functional efficiency besides being one of the important constituents of corporate governance structure. One of the major instruments in improved financial reporting is the preparation of Consolidated Financial Statements (CFS). Consolidated Financial Statements are the financial statements of a group, presented by a parent/holding company, in which the assets, liabilities, equity, income, expenses and cash flows of the holding company and its subsidiary companies are presented as those of a single economic entity. ‘The purpose of CFS is to highlight the financial position and operational performance of the {group which would not have been apparent from the standalone financial statements. 1 Financial reporting in India has been governed by the Companies Act, 1956, the Indian Accounting Standards formulated and issued by the Institute of Chartered Accountants of India and by the listing agreements. The preparation and presentation of the CFS in India has been [ Regulatory Framework (prior to Companies Act, 2013) regulated as under: * Section 212 of the Companies Act, 1956 requires holding Companies to attach the financial statements of each of its subsidiaries along with the holding Company's interest therein with its own standalone financial statements. * Clause 41 of the listing agreement also requires submission of annual audited consolidated financial results for listed companies while submitting annual audited financial results prepared on stand-alone basis to the stock exchange within sixty days from the end of the financial year. © Preparation of CFS is required to comply with the requirements of Accounting Standard- 21 (Consolidated Financial Statements), Accounting Standard-23 (Accounting. for Investments in Associates in Consolidated Financial Statements) and Accounting Standard-27 (Financial Reporting of Interests in Joint Ventures) issued and specified by the Institute of Chartered Accountants of India (ICAI) under Section 211 of the Companies Act, 1956. [3 | Regulatory framework (post Companies Act, 2013) The Companies Act, 2013 focuses on corporate reporting framework and some of the significant changes relating to CFS are as under a) Mandatory Preparation of Consolidated Financial Statements Section 129(3), of the Companies Act 2013 mandates preparation of CFS for all parent/holding company companies having one or more subsidiaries in addition to the separate financial Page 1 of 17

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