Page 262 - CA Final PARAM Digital Book.

method and assets of parent company (H Co. Ltd.) are depreciated using straight line method, is in
order. However, each part of an item of Property Plant and Equipment with a cost that is
significant in relation to the total cost of the item should be depreciated separately under
Component Method of Depreciation as per AS 10 on Property, Plant and Equipment.

Conclusion
➢ Thus, R Co. Ltd., though adopting straight line method but does not giving effect to component
accounting of depreciation in respect of high value assets, is not in compliance with Ind AS 16/
Accounting Standard 10 Property Plan and Equipment.

Responsibility of Parent & Permanent Consolidation Old Course – (N12E, M16M, SM17, PM17,
QNO Adjustment N17M, N18M, SM21, N21R)
440.000
TITANIUM CNO— GA.060
Briefly explain the responsibility of holding company for preparation of Consolidated Financial

Statements.
Answer ➢ The responsibility for the preparation and presentation of consolidated financial statements,
among other things, is that of the management of the parent. This includes:

identifying components, and
obtaining accurate and complete financial information from components; and
GAAP conversion, where applicable.
harmonization of accounting policies and accounting framework; and.
including the financial information of the components to be included in the consolidated
financial statements;
making appropriate consolidation adjustments.
where appropriate, identifying reportable segments for segmental reporting;
identifying related parties and related party transactions for reporting;

➢ Instructions to Component
Apart from the above, the parent ordinarily issues instructions to the management of the
component specifying the parent’s requirements relating to financial information of the
components to be included in the consolidated financial statements. The instructions ordinarily
cover the accounting policies to be applied, statutory and other disclosure requirements applicable
to the parent, including the identification of and reporting on reportable segments, and related
parties and related party transactions, and a reporting timetable.

QNO Objective, as an Auditor, in the audit of Consolidated Financial Statement Old Course – (M18E, N19R)
440.050 TITANIUM CNO— GA.080
Deluxe Ltd. holds the ownership of 51% of voting power and control over Executive Ltd. Holding
company have prepared the consolidated financial statement as required by Sec. 129 of the Companies

Act, 2013. What will be your objective, as an Auditor, in the audit of such Consolidated Financial
Statement?
Answer Part I -- Relevant Standards & Laws
▪ Section 129 (4) of the Companies Act, 2013

Part II -- Requirements of Relevant Standards & Laws
➢ Objective of the Auditor in the audit of Consolidated Financial Statements
As per section 129 (4) of the Companies Act, 2013 the auditor’s objectives in an audit of
consolidated financial statements are:

to satisfy himself that the consolidated financial statements have been prepared in
accordance with the requirements of applicable financial reporting framework;
to enable himself to express an opinion on the true and fair view presented by the
consolidated financial statements.
to enquire into the matters as specified in section 143(1) of the Companies Act, 2013;and.
to report on the matters given in the clauses (a) to (i) of section 143(3) of the Companies
Act, 2013; for other matters under section 143(3)(j) read with rule 11 of the Companies
(Audit and Auditors) Rules, 2014, to comment on the matters specified in sub-rule (a),(b)
and (c), on the basis of auditors’ report of the respective component to the extent
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