Do You Need Consolidation Audit Support? A Practical Starting Point
Consolidated financial statements are where group accounting either holds together under audit scrutiny or falls apart at the elimination entries. A parent's standalone books can be immaculate and the consolidation can still be wrong — wrong control assessment, wrong elimination of intercompany profit, wrong minority interest computation, wrong foreign subsidiary translation. At PNPC Global, we have supported statutory auditors, group finance teams, and component auditors on consolidation working papers since well before Ind AS made consolidation mandatory for most Indian corporates.
What This Actually Covers
Consolidation Audit Support is the specialised engagement in which PNPC assists a group's statutory auditor, finance team, or holding company management in preparing, reviewing, and audit-readying the Consolidated Financial Statements (CFS) of a parent along with its subsidiaries, associates, and joint ventures. Under Section 129(3) of the Companies Act 2013, where a company has one or more subsidiaries (including associate companies and joint ventures), it must prepare a consolidated financial statement in addition to its standalone financial statements, and lay it before the Annual General Meeting in the same manner as the standalone statements. The CFS must be prepared in accordance with the applicable accounting standards — Ind AS 110 (Consolidated Financial Statements), Ind AS 111 (Joint Arrangements) and Ind AS 28 (Investments in Associates and Joint Ventures) for companies to which Indian Accounting Standards apply, or AS 21, AS 23, and AS 27 for companies still following the older Accounting Standards framework.
For the full scope, current process and what PNPC includes, see the dedicated Consolidation Audit Support service page.
Is This Relevant to Your Business?
- Your company has one or more subsidiaries, associates, or joint ventures and is therefore mandatorily required under Section 129(3) of the Companies Act 2013 to prepare consolidated financial statements alongside standalone financial statements
- You are the group's principal statutory auditor and need a structured process to evaluate component auditors' work under SA 600, including independence checks, communication protocols, and documentation of reliance decisions
- Your group includes at least one foreign subsidiary or joint venture and the CFS requires foreign currency translation under Ind AS 21, together with associated FEMA/ODI reporting cross-checks
- You are preparing for a listed-entity quarterly or annual consolidated results filing under SEBI LODR Regulation 33, which imposes tight submission timelines that leave little room for last-minute consolidation errors
When It Isn't the Right Fit
- A standalone company with no subsidiaries, associates, or joint ventures has no consolidation obligation under Section 129(3) — a standard statutory audit is the appropriate engagement
- A wholly-owned subsidiary that is itself not required to prepare CFS because its own ultimate or intermediate holding company already files CFS covering it, and the exemption conditions under Ind AS 110 (paragraph 4) or the Companies (Accounts) Rules are met, does not need a separate consolidation exercise at its level
- If what you need is the primary statutory audit of the parent or subsidiary's standalone financial statements rather than the group consolidation working papers, our Statutory Audit under Companies Act service is the correct engagement
Quick Answers
What is consolidation audit support, exactly, and how is it different from a regular statutory audit?
A statutory audit expresses an opinion on one entity's standalone financial statements. Consolidation audit support is the specialised work of building, reviewing, and audit-readying the Consolidated Financial Statements (CFS) that combine a parent with its subsidiaries, associates, and joint ventures into a single set of group financial statements under Section 129(3) of the Companies Act 2013. It involves classification of each investee, elimination of intercompany transactions and investment balances, non-controlling interest computation, and — where a different firm audits a subsidiary — coordination under SA 600 or SA 299. We can act as the group's consolidation working-paper preparer, as a second set of eyes for an existing principal auditor, or as the principal auditor ourselves depending on the engagement.
Is consolidation mandatory for every company that has a subsidiary?
Yes, in principle. Section 129(3) of the Companies Act 2013 requires any company with one or more subsidiaries (which includes associate companies and joint ventures for this purpose) to prepare consolidated financial statements and lay them before the AGM. There is a narrow exemption for certain intermediate wholly-owned or partially-owned subsidiaries where the ultimate or an intermediate parent already prepares CFS that includes them and specified conditions under the applicable accounting standard and the Companies (Accounts) Rules are satisfied — but this exemption has specific conditions that must be checked, not assumed.
What accounting standards govern consolidation in India — Ind AS or AS?
It depends on which framework applies to your company. Companies mandated to apply Indian Accounting Standards (Ind AS) — based on net worth, listing status, and other thresholds under the Companies (Indian Accounting Standards) Rules, 2015 — consolidate under Ind AS 110 (Consolidated Financial Statements), Ind AS 111 (Joint Arrangements), and Ind AS 28 (Investments in Associates and Joint Ventures). Companies not yet within Ind AS applicability follow the older framework — AS 21 (Consolidated Financial Statements), AS 23 (Accounting for Investments in Associates), and AS 27 (Financial Reporting of Interests in Joint Ventures). The two frameworks differ meaningfully — for example, AS 27 permits proportionate consolidation of jointly controlled entities in some cases, while Ind AS 111 generally requires the equity method for joint ventures.
Getting This Right From the Start
Group accounting is where a single missed elimination entry or misclassified subsidiary becomes a boardroom problem — talk to PNPC before your next consolidation close, not after your auditor flags it.
PNPC Global has advised Chennai, Bangalore and Hyderabad businesses since 1986. Explore the full Audit & Assurance practice for related services, or go straight to the Consolidation Audit Support page for specifics.
Rates, thresholds and filing dates are set by the relevant authority and revised periodically. Treat anything numeric here as "ask PNPC for the current figure," not as a quoted fact.