ICAI Revised Guidance Note-Audit of Consolidated Financial Statements
The Auditing and Assurance Standards Board of ICAI has released out a revised Guidance Note on Audit of Consolidated Financial Statements.
Earlier, the Institute of Chartered Accountants of India had issued the ‘Guidance Note on Audit of Consolidated Financial Statements in 2003. As stated in the revised Guidance Note, since 2003 a number of developments have taken place which necessitated the revised version of the Guidance Note.
few notable developments include the Companies (Accounting Standards) Rules, 2006 , Companies (Indian Accounting Standards) Rules, 2015 and the Companies Act, 2013 which has changed provisions relating to the preparation and audit of the consolidated financial statements.
Section 129(4) of the Companies Act, 2013 requires that the provisions applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements. Also, the principal auditor of the consolidated financial statements is responsible for expressing an opinion on whether the consolidated financial statements are prepared, in all material respects, in accordance with the financial reporting framework under which the parent prepares the consolidated financial statements in addition to other reporting requirements/obligations cast by the Companies Act, 2013 and any other statute to the extent applicable.
The Guidance Note runs into 61 pages including 2 appendices containing Illustrative Formats of Independent Auditor’s Report on Consolidated Financial Statements and Definitions of Terms used in the Guidance Note.