The Situation
The group structure involved multiple layers of ownership and varying accounting practices across subsidiaries. Certain intra-group transactions and revenue streams did not have detailed assessment to ensure appropriate consolidation adjustments were posted.
Our Approach
A structured approach to consolidation and revenue alignment
We reviewed the group structure and reviewed the management’s assessment of control in accordance with IFRS 10. We evaluated revenue recognition policies under IFRS 15 Revenue from Contracts with Customers, tested intercompany balances, transactions, and elimination entries and assessed consistency of accounting policies applied across group entities.
We defined and documented a clear audit approach for consolidation, including control assessment tests for all entities. We provided feedback from the outcome of the testing procedures, which resulted in standardised revenue recognition policies across the group, in line with IFRS 15.
The client then established robust intercompany reconciliation and elimination procedures and developed supporting documentation to strengthen audit trail and consistency in group reporting.
Outcome
Accurate consolidation and consistent group reporting
The client achieved accurate and compliant group consolidation, clear and supportable documentation for control assessments. Our tailored audit approach helped them in ensuring appropriate and consistent accounting policies were adopted across subsidiaries and strengthened the overall financial reporting framework at the group level.
RAA’s structured and methodical approach enabled the client to address complex consolidation and revenue recognition challenges. By establishing consistent policies, strengthening documentation, and enhancing group-level processes, the engagement supported sustainable improvements in financial reporting and audit readiness across the organisation.
Key takeaway
RAA Perspective
Consolidations can be scary, however it’s important to build a control framework to ensure that accurate results are obtained.