Consolidated and group accounts

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Monsoon
Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
in General accounting discussion
I've not looked at these for 5 years and something's come up. Before I agree to take it on, please can anyone confirm my recollections?

Company A fully owns Company B. This is a group.

Both companies prepare accounts and CT600s as normal and file with HMRC/CO House. Dividends paid by Co B are franked investment income for company A.

Consolidated accounts are not required for any statutory reporting but are to be prepared for the investors of company A to enable them to see the overall picture of their business. These don't need submitting to anyone other than the shareholders.

Thanks :)

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  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
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    Hi Monsoon,

    You have a parent/subsidiary relationship here.

    Companies Act 2006 allows a "small" group the exemption not to prepare statutory consolidated financial statements. The thresholds for groups to qualify as small or medium are in my article which may help you.

    If you are preparing "internal" consolidated financial statements, then the normal intra-group elimination rules (FRS 2) would apply because otherwise intra-group trading would artificially distort the true picture.

    Kind regards
    Steve
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Steve Collings wrote: »
    Hi Monsoon,

    You have a parent/subsidiary relationship here.

    Companies Act 2006 allows a "small" group the exemption not to prepare statutory consolidated financial statements. The thresholds for groups to qualify as small or medium are in my article which may help you.

    If you are preparing "internal" consolidated financial statements, then the normal intra-group elimination rules (FRS 2) would apply because otherwise intra-group trading would artificially distort the true picture.

    Kind regards
    Steve

    Steve, thank you so much, your answer is much appreciated.
    They will indeed be small :D
    Thankfully, I remember the intra-group elimination concepts.

    Interesting article. Have they sorted out s.413 yet?!?!?!?!?!
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
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    Monsoon wrote: »

    Interesting article. Have they sorted out s.413 yet?!?!?!?!?!

    Well, the Act is up for review in 2011 and hopefully it will be sorted out by then. This area of the Act was extremely poorly drafted and the individuals who were responsible for drafting this have been severely criticised by the CCAB as well as those in practice (including myself!!)

    I do know that one of the Big 4 analysed the requirements of s.413 and they noted that the original EU directive from which this particular section is derived does not require every individual movement on a director(s) current account and a 'common sense' approach to disclosure should be made. However (and the professional bodies seem to concur with my view), that whilst the analysis provided by the Big 4 does carry some weight, it is still not in exact accordance with the wording in s.413 (which, again has been drafted by lunatics who have no sense of commercial reality!!)

    Hopefully 2011 will see a change and this particular area is definitely up for review!

    Best wishes
    Steve
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Thanks Steve. I'm not surprised it's been criticised so heavily - disclosing everything on some DLAs would take months. We do take a pragmatic view on these things - do they really want a 10-page appendix on DLA movements?! Nice to see the Big 4 looked at it, but it's ridiculous that whoever drafts these doesn't think these through properly.

    The other bugbear of mine is how the WTC legislation fits SO badly with the standard method of remuneration for small Ltd Co's. Whoever drafted that also needs a poke...

    Thanks
    Jenni

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