Consistency of holding company and group financial statements

KnowledgeBase for Accountants: Consolidation

Where a holding company prepares group financial statements there is a level of consistency that must be applied. For instance, the directors of the holding company should ensure the subsidiaries’ and the holding company’s financial statements:

  • are prepared using the same financial reporting framework unless there are good reasons for not doing so (only applies where those subsidiary financial statements are prepared under the Act and does not apply to those undertakings which do not trade for the acquisition of gain by the members). These reasons, if applicable, must be disclosed in the entity financial statements of the holding company (Section 296);


  • have financial year end dates that coincide except where there are substantial reasons not to do so. These reasons shall be disclosed in the notes to the statutory financial statements of the company if applicable (Section 288(3) and Schedule 3, para 74 and para ) Read more on this at – Financial year end.


  • have been prepared using uniform group accounting policies. If subsidiaries use different accounting rules, the values of amounts shall be so adjusted so as to conform with the rules used for the group accounts (Schedule 4, para 9(1)). If these adjustments are not material, they need not be made. If there are special reasons for the department from the requirement to use uniform accounting policies, then the reasons for this and their effect must be stated in the notes to the group financial statements.