IFRS Groups Master Pack

Overview

• This group pack consolidates existing IFRS and FRS 101 companies into an accurate, compliant set of IFRS group accounts.
• This pack shares key features with the IFRS Limited, FRS 102 Limited and FRS 102 Group packs. Their User Guides should be referred to for common features, especially the FRS 102 Limited pack for basic information.
• The group does not need to be created before the individual entities.
• The year end dates of the individual entities must all be the same.
• Individual entities must be on the same master pack version.
• The group itself is prepared under IFRS. The parent and subsidiaries can be prepared under IFRS or FRS 101, in any combination.  
• The group financial statements can either be standalone group statements or can include the parent company's individual financial statements as well. Note however that where the parent company's financial statements are included, the default organisation of the formats assumes that the parent company  is taking advantage of the FRS 101 exemptions and will therefore have its own, reduced disclosure financial statements which appear after the group financial statements (rather than parent company disclosures being intermingled with the group figures, as is the standard presentation for FRS 102 groups).

• The pack does not provide the additional disclosures required for listed companies and public interest entities.
• Trial balances are not imported. Instead, the figures are aggregated from the name ranges in the individual entities, together with the statutory database information.
• Group adjustments are made through the group journals.
• There is no provision for translation of entities denominated in a foreign currency and these should be created in AP using the group's currency.
• Partially owned subsidiaries, acquisitions part-way through the year and joint-ventures are not automatically accounted for and therefore consolidation adjustments will need to be made for these.
• A subsidiary may be a member of more than one group (multi group subsidiary).
• There is no limit to the number of subsidiaries.

Setting up the group structure within the IFRS group

1. From the Reference folder, click on the node Consolidation Group to enter the screen.

Linking the parent 

Either click Add Parent on the ribbon or, to the right of Parent Name, click on the “…” ellipsis button (see above). A pop-up box will appear (see below). Within this, search for the parent entity, select and click OK.

Once the parent has been selected, the Chart Length, Year End and Parent MPV will be displayed in the area above the grid in which the subsidiaries will be selected and listed (see above).

Linking subsidiaries to parent

3. Either click Add Subsidiary on the ribbon or, under the column header Subsidiaries, click on the ellipsis button, the pop-up box will reappear. Within this, search for the first subsidiary entity, select and click OK.

4. Repeat step (3) for each subsidiary.
5. Tick the check box if the subsidiary is wholly owned (see below) - if the tick is not accepted, click off the screen and back on again.

Checking the consolidation figures

Full collection

This provides the pages and notes for the Consolidated financial statements.

The pages and notes are organised on the assumption that the parent (where included) is applying FRS 101 for its own separate financial statements, and therefore:

• The group pages and supporting notes are shown first. 
• The parent pages and supporting notes are shown after the group pages.

This approach can be applied also where the parent applies full IFRS. However, in that circumstance (where both the parent and the group apply full IFRS and therefore the figures reported for each are fully compatible), it is also acceptable to show the group and parent figures intermingled (eg group balance sheet, then parent balance sheet; group fixed assets, then parent fixed assets).  Where the user wishes to adopt this alternative approach, the user will need to move the various pages and notes into place.

Management collection

The following reports are provided within this collection:

Group detailed income statement and schedules: This is a standard detailed income statement for the group as a whole, with a line for each nominal code.

Group audit trail: This shows the full detail of the income statement and balance sheet, analysed across columns for the parent, subsidiaries and group journal adjustments. Note how the formulae call up the relevant figures:

• "0" or no numerical marker refers to group entries, ie journals and database adjustments.
• "1" refers to the parent.
• "2" refers to the first subsidiary, and so on for the others.
• "Sum" refers to the group total.
• "Sumex" refers to the group total before group adjustments.

This report includes up to 15 subsidiaries. The number displayed may be increased by adding in more columns, copying the formula within the report and changing the unique subsidiary identifier number in the column(s) - eg,change “16” which refers to subsidiary 15 to “17” which will then refer to subsidiary 16. The page format may either be copied from the ribbon, using Copy format to create a separate page, or from within the existing format. The page can also be exported to Excel, which will display the figures as values not formulae, as for all pages/notes in CCH Accounts Production.

The layout of the Group Audit Trail is as follows:

Exception Report: The purpose of this report is to highlight tailoring questions within the Statutory Database for which the response given in the group does not match the response given in the parent. Only those which do not match will be displayed. For information, double click into the report to see the format of the report and areas being checked.

Generally

• Presentation choices and text paragraphs are generally picked up from the group database.
• Optional descriptions in grids are generally taken from the parent company.
• Numerical entries in grids will generally be required only for group consolidation adjustments.

The statutory disclosures for a group are generally equivalent to those of a large entity within FRS 102, except that the directors’ report disclosures will be reduced where the size of the entity is set to “small” or “medium” in the Client preferences section.

The format works on a consolidated total basis, and therefore adds the amounts entered in the parent entity and all the subsidiary companies together. For most statutory database areas, information only needs to be entered in the group if there are consolidation adjustments in that area.

Where group figures are brought through, these may be expanded to view the analysis across the Group, by clicking on the icon “View Group Values” on the ribbon. This function is only relevant for statutory database grid items and will be greyed out for paragraph and flag (yes/no) nodes. The example below shows the employee analysis grid in the statutory database:

Choosing “View Group Values” on the ribbon provides:

General folder

Strategic report

Information regarding the strategic report is drawn from the group database.

Directors’ report

Information regarding the strategic report is drawn from the group database.

Audit report

The auditor’s name and address and the parent company name are taken from the parent entity database. All other information relating to the Auditors’ Report is drawn from the group database.

Accountants’ report

Information regarding the accountants’ report is drawn from the group database.

Income statement

Presentation options for the group are taken from the consolidation database.

For most statutory database areas, information only needs to be added in the group if there are consolidation adjustments in the area. There are however some areas (eg the analysis of Revenue) where the total group information is entered.

Statement of financial position

Presentation options for the group are taken from the consolidation database.

Statement of changes in equity

The entry of amendable headings and the analysis of total "other movements" is carried out in the consolidation database since the group might analyse these items differently from the parent/subsidiaries, or combine them where they are individually immaterial.

Cash flow

The cash flow works on a consolidated total basis, and therefore adds the amounts entered in the parent entity and all the subsidiary companies together, including all statutory database disclosures. Entries in the group database will be added to those already shown in the parent and subsidiaries.

Therefore, the first step is always to ensure that the individual cash flows for the parent and each subsidiary balance. Where those are correct, it is unlikely that the group figures will show a difference. Additional adjustments in the group cash flow should arise only in response to the effect of group journals.

The reallocation between operating activities, financing activities and investing activities is chosen at group level for investment income, interest paid and dividends paid. 

Accounting policies - Group

All group accounting policies are entered in the group database. If there are any changes to the intangible assets or tangible assets headings when disclosing depreciation rates, these are made in the intangible assets, asset type headings and tangible assets, asset type headings sections of the balance sheet notes tab, for the group.

Accounting policies - Parent

Where the parent balance sheet and notes are included in the group pack, the parent company policies are assumed to be aligned with those of the group, except where specified. Within the parent’s statutory database, there is an option which can be used to show only those parent policies that are included after the parent:

The image above shows the company policies that will be included in the parent section of the group financial statements. Where the company has policies that diverge from those of the group, they are entered in the “Spare accounting policy” nodes.

Adoption of new or revised standards

This should be entered in the group database and, where applicable, in the parent company as well.

Critical accounting estimates

This should be entered in the group database and, where applicable, in the parent company as well.

Notes to the income statement

Notes to the statement of financial position

Other notes

Text paragraphs are generally picked up from the group database. Entries in grids will generally be required only for group consolidation adjustments. However, group totals are required for:

• Contingent liabilities
• Transactions with directors (all sentences)
• Post balance sheet events (events after the reporting period)

General

We strongly advise that all group Companies are finalised prior to printing the consolidated accounts, to avoid having to reprint after adjustments are made to any entity in the group.

Dividends

All or part of the subsidiary entity’s dividends will be payable to the holding entity and are therefore inter-group transactions. These must be adjusted against one another (ie cancelling income received vs dividends paid) using consolidation journals so that only external dividends are disclosed, being:

• parent dividends paid, plus
• any dividends paid by subsidiaries to minority interests.

Minority interests / Non-controlling interests

Nominal codes are set up for postings which feed through to the P&L, balance sheet and statement of changes in equity.

Multi group subsidiary

It is possible to add a subsidiary to more than one consolidation at the same time, eg where the group includes interim groups. The option is enabled for each entity, by selecting the “Multi group subsidiary” option on the ribbon:

The Task Permission is: #Client #Allow Consolidation Multiple group Subsidiaries. If the user is working within the subsidiary accounting period and clicks the consolidation group option, they will now be prompted to select which group is opened. 

Note that this does not support the scenario where the subsidiary is partly owned by two or more unrelated groups, requiring the subsidiary’s balances to be apportioned to the various parent companies. In this rare circumstance, the user would need to create at least one dummy subsidiary, or else enter the subsidiary's balances through a consolidation journal.

Mixed entity groups

It is not possible to add subsidiaries to a group that are a different entity type to that of the parent.

Acquisitions during the year

When an entity is acquired during the year, only values after the date of acquisition should form part of the consolidated accounts. Ensure that the comparatives and pre-acquisition proportion of the current year figures, of the acquired entity, are not included in the consolidation. To do this duplicate the client.
To duplicate the client:

• Export the data into Excel and save as a CSV (comma delimited) file.
• Adjust the current year figures and remove the comparative year.
• Create a new client in CCH Central.
• Import the CSV file into the new client.
• Use this as the Subsidiary that is added to the list in the group structure.

Non-coterminous financial years

The directors of a parent entity must ensure, except where there are good reasons to the contrary, that the financial years of the parent and subsidiary undertakings coincide. If the financial year of the subsidiary does not coincide with that of the parent any changes that have taken place in the intervening period, that could materially affect the view given by the consolidated accounts, should be considered by adjustments in the preparation of the consolidated accounts. In effect this means that the consolidated accounts must present, within the limits of materiality, the same position as if coterminous year-ends had been adopted. To do this, duplicate the subsidiary client.
To duplicate the client:

• Export the data into Excel and save as a CSV file.
• Adjust the current year figures and remove the comparative year.
• Create a new client in CCH Central.
• Import the CSV file into the new central client.
• Use this as the Subsidiary that is added to the list in the group structure

Joint ventures

In group accounts, an investor that is a parent must use the equity method to account for jointly controlled entities. (IFRS, section 15). There are nominal codes set up for JVs and areas in the statutory database for data input.

Foreign currency translation

Each asset, liability, revenue or cost arising from a transaction denominated in a foreign currency, should be translated into the local currency at the exchange rate in operation on the date on which the transaction occurred. This will be done outside of CCH Accounts Production.

Management information pages

There are no management information pages such as a detailed profit and loss account or analysis provided for the consolidated formats.