Consolidating accounts group
So we need to be able to fully understand group accounts.
The treasurer’s role includes interpreting financial information about other businesses; and understanding and preparing information about our own business.
Most groups are owned and controlled by a common holding company called the parent.
The parent, in turn, controls one or more subsidiary companies (subsidiaries).
Most of our external contacts will also be parts of groups.
Internal transactions aren’t normally relevant information for the external users of group accounts.
Internal items are ones between members of the same group, for example, any sales and purchases between Holdco and Sub.
This makes groups readily comparable, even if their legal and ownership structures are quite different.
Importantly though, the accounting group is not a legal entity in its own right.
Holdco and Sub’s individual assets and liabilities today are set out above, together with the consolidated group figures.