A group with several subsidiaries may never have resolved whether one of them should be consolidated. Under IFRS 10 the test is control, not the size of the entity or the ownership percentage alone.

This sits alongside multi-entity consolidation but addresses a different layer. That work builds the infrastructure for monthly consolidation, such as chart of accounts mapping and elimination processes. This work covers the judgments about what to consolidate and how to account for specific transactions.

The control assessment

Consolidation is not simply a function of ownership percentage. Control assessment can be complex where there are shareholder agreements, potential voting rights or minority protective rights that change who controls an entity in substance.

Joint ventures and step acquisitions

A joint arrangement that is not a clean fifty-fifty or majority split, or a stake increased gradually over several years, needs careful analysis. Classification decides whether an entity is consolidated, accounted for as a joint venture or treated as a joint operation. A routine consolidation process cannot resolve these questions on its own.

Business combination accounting

When a company is acquired, purchase price allocation, goodwill and fair value adjustments to the acquired assets and liabilities need specialist treatment, separate from routine period-to-period consolidation. Errors at acquisition distort reported results for years afterward.

Connection to financial reporting

The technical positions developed here inform financial reporting advisory work. A consolidation judgment that is not documented and disclosed tends to surface as an audit finding. A position also depends on the data structure that implements it, which is built through multi-entity consolidation work.

Position papers and implementation

The output is a technical position paper for each judgment, developed in coordination with your external auditor so the position is not a surprise to them. Support continues through the accounting entries needed to implement each position once it is agreed.

Raising questions early

The best time to resolve a consolidation judgment is well before year-end audit fieldwork begins. Raising a complex control assessment or business combination question early gives everyone, the auditor included, room to reach a considered position.