Technical Aspect of Consolidation

Running head: COMPANY ACCOUNTING
Company accounting
Name of the student
Name of the university
Student ID
Author note

1COMPANY ACCOUNTING
Memorandum
To: Board of Directors
From: Jenny Hestings, Accountant
Date: 7th September 2019
Subject: Technical aspect of consolidation
This memo will highlight some of the issues associated with consolidation. Listed companies are
oblized to comply with the requirements of consolidation for presenting the report in true and
fair manner. Generally, the business consolidation is related with acquisition and merger and the
entities are required to prepare consolidated financial report where all the subsidiaries data are
reported under the single statement of parent entity.
Requirement of consolidated financial statement
Generally, the parent entity and its subsidiaries maintain own records related to accounting along
with preparing own financial statements. However, as the central management is in control of the
parent as well as its subsidiaries and they are associated with each other, parent entity is required
to prepare one set of the financial statements that is known as the consolidated statements. It
consolidates the financial reports value of the parent entity with the subsidiaries and represents
the parent along with its subsidiaries as the single entity. In accordance with the requirement of
AASB 10, ANZ group prepares the consolidated financial report for delivering the relevant
information to the users of financial reports. Further, it provides the financial analysts, investors
and business owners getting complete overview of parent entity. Consolidated statement further

2COMPANY ACCOUNTING
eliminates the transactions those take place among the parent entity and the subsidiaries.
Elimination of these transactions provides simplified view regarding business performance. In
addition to that, the parent group can evaluate the risks as well as benefits through analyzing the
consolidated financial report.
(Figure 1: Screenshot of divisional performance)
From the above figure it can be established that the group has different business units at different
places. However, the performance of each division is not same. Hence, looking at the individual
report the users will not be able to draw a picture of its performance unless all the subsidiaries
are added up to a single statement. Hence, consolidation is crucial for representing group
performance and to comply with the AASB 10 and therefore the parent company shall prepare
consolidated statement even if the subsidiaries have the status of separate legal entity.
Company’s policy and information
Corporate governance statement of the entity disclosed how it has complied with corporate
governance principles and associated recommendation issued by ASX corporate governance
council. ANZ is committed in maintaining the high standard under the governance framework.
ANZ issues separate statement for its corporate governance compliance where it has mentioned