Consolidated Accounts
A guide to
Consolidated accounts
A SIMPLE GUIDE TO CONSOLIDATED ACCOUNTS
This is a basic guide prepared by the Technical Advisory service for members and their clients. It is an introduction only and should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.
Requirement to Prepare
The Companies Act 2006 gives exemption from the requirement to prepare group accounts to small groups but not medium sized groups. Previous legislation permitted both small and medium sized groups exemption from preparing consolidated accounts. Therefore for accounting periods beginning on or after 6 April 2008 small groups will still not be required to produce consolidated accounts but medium sized groups will.
Under Companies Act 2006 section 399, consolidated financial statements have only to be prepared where, at the end of a financial year, an undertaking is a parent company. Therefore, parent undertakings that are not companies are not required by the Act to prepare consolidated financial statements, but they are required to do so in certain circumstances by FRS 2. If the statutory framework under which an undertaking is established requires the undertaking to prepare consolidated financial statements and to prepare financial statements that give a true and fair view (and therefore comply with FRS 2) the partnership would be required to prepare consolidated financial statements in accordance with FRS 2. Also entities such as partnerships could be subsidiaries and therefore may be required to be included in group accounts.
The Companies Acts apply to parent undertakings registered in the UK. However if a UK parent undertaking has subsidiary undertakings overseas those subsidiaries would need to be included in the consolidated financial statements.
For accounting periods beginning on or after 6 April 2008 small companies and small groups need to satisfy the following conditions for two
Consolidated accounts
A SIMPLE GUIDE TO CONSOLIDATED ACCOUNTS
This is a basic guide prepared by the Technical Advisory service for members and their clients. It is an introduction only and should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.
Requirement to Prepare
The Companies Act 2006 gives exemption from the requirement to prepare group accounts to small groups but not medium sized groups. Previous legislation permitted both small and medium sized groups exemption from preparing consolidated accounts. Therefore for accounting periods beginning on or after 6 April 2008 small groups will still not be required to produce consolidated accounts but medium sized groups will.
Under Companies Act 2006 section 399, consolidated financial statements have only to be prepared where, at the end of a financial year, an undertaking is a parent company. Therefore, parent undertakings that are not companies are not required by the Act to prepare consolidated financial statements, but they are required to do so in certain circumstances by FRS 2. If the statutory framework under which an undertaking is established requires the undertaking to prepare consolidated financial statements and to prepare financial statements that give a true and fair view (and therefore comply with FRS 2) the partnership would be required to prepare consolidated financial statements in accordance with FRS 2. Also entities such as partnerships could be subsidiaries and therefore may be required to be included in group accounts.
The Companies Acts apply to parent undertakings registered in the UK. However if a UK parent undertaking has subsidiary undertakings overseas those subsidiaries would need to be included in the consolidated financial statements.
For accounting periods beginning on or after 6 April 2008 small companies and small groups need to satisfy the following conditions for two