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Unlisted Company and Consolidation
09-30-2009, 06:38 PM
Post: #1
Unlisted Company and Consolidation
Dear members,

My question are related to topic are;

Are the financial statements of unlisted company (public, private) are required to consolidate?

Please reply specifically in context to Pakistani Companies with relevant references.

If financial statements are required to be prepared under Financial Reporting Standards for SSEs, MSEs then how consolidation would be done?

Regareds,


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09-30-2009, 09:21 PM
Post: #2
 
Star

I refer you to selected opinions Volume XIV issued by ICAP. It's opinion No. 1.4 addresses the question asked by you. You can download this volume from ICAP's website.

Section 237 of CO84 requires all holding companies to consolidate the financial statements. Holding company's definition does not entail any differences on account of status of such company as listed or unlisted etc.

Although paragraph 10 of IAS 27 exempts unlisted companies from consolidation. However, since CO84 overrules, we have to follow it.

AS far as Standards for MSEs and SSEs are concerned, it has been mentioned therein that if any thing is not clear, one has to refer back to IFRSs. Further section 237 also requires consolidated accounts to be compliant of 4th schedule of CO84 instead of 5th schedule.

Theerefore, such consolidation will be made under IFRS (IAS-27) and such accounts, in my view, should be compliant of IFRSs (since 4th schedule ddo not allow following standards for MSEs or SSEs.).

I hope you will find it beneficial.

Regards,



KAMRAN.
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10-01-2009, 01:55 PM
Post: #3
 
Dear KamranACA,

Thank you for your useful response. I think it is very clear from the opinion of of ICAP that all holding companies are required to consolidate their accounts in addition to standalone accounts.

One thing i want to share with all members that under IAS-27 a company is not exempt from consolidation merely that it is unlisted company. There are four conditions in order to get exemption from consolidation under para 10. These all four conditions must be fulfilled to get such exemption.

Needless to mention all the conditions because all relevant member would be well aware from para 10.

Thanks again.

Regards,


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10-01-2009, 04:19 PM
Post: #4
 
You are right Star.

Similar conditions are given in paragraph 13 of IAS 28 for exempting the application of equity method of accounting.

All these conditions have to be fullfilled simulatneously.

Regards,


KAMRAN.
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10-01-2009, 09:43 PM
Post: #5
 
since the sol has already been elaborated in much detail in the above posts, there's no need to comment any further..
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10-02-2009, 02:48 PM
Post: #6
 
Is the IAS-27 is not applicable in Pakistan ? Has the SECP has issued any circular regarding not applicability of pera 10 of IAS-27. As per my information many private limited company and group of private companies making consolidated financial statements.

Fuuther ITO gives the concept of Group Taxation. Can the option of group taxation can be availed by a group of private companies/Unlisted Public Companies without preparing Consolidated financial statements of the group.

In practical world, I have seen that many gruops of Private Companies(where CMA's and CA's are CFO's/Director Finance) making Consolidated Financial Statements.
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10-02-2009, 02:55 PM
Post: #7
 
Dear awaisaftab,

IAS-27 is notified by SECP and is applicable in Pakistan. As stated by KamranACA, ICAP has given opinion that all holding companies are required to prepare and submit consolidated accounts as well as standalone under CO1984.

For group taxation, i have started a new topic in tax section of this forum last day. Lets see what would be there.

Regards,

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