The organization is the founder of two companies in Russia. The authorized capital in one LLC is 100% and in another 70%. Peculiarities of legislation on the submission of consolidated financial statements and statutory audit.

Question: Organization LLC (OSNO) has established two companies in Russia. Contributions to the authorized capital of these companies amounted to: LLC No. 1 - 100%, LLC No. 2 - 70%. Should our "Main" company submit summary/consolidated reports? Or some additional reporting to the reporting when applying OSNO, to conduct a mandatory audit?

Answer: Who should prepare the consolidated financial statements is specified in the Federal Law of July 27, 2010 No. 208-FZ. The obligation to submit consolidated financial statements can only be established by law or by the constituent documents of the company. In particular, consolidated IFRS reporting is mandatory for credit and insurance organizations, the state corporation Rosatom, etc.

Your organization is not required to submit any additional reporting when applying OSNO.

In particular, a mandatory audit is carried out if the organization is: a professional participant in the securities market or the organization's securities are admitted to organized trading; insurance company; non-state pension fund (or its management company); credit institution; public company. An audit is required if: the volume of proceeds from the sale of products (goods, works, services) for the previous reporting year exceeds 400,000,000 rubles; the amount of balance sheet assets at the end of the previous reporting year exceeds 60,000,000 rubles.

A complete list of cases when it is necessary to conduct a mandatory audit is given in Part 1 of Article 5 of the Law of December 30, 2008 No. 307-FZ.

Rationale

Who should prepare consolidated financial statements under IFRS

Some entities are required to present and publish consolidated financial statements in accordance with IFRS. This is reporting on the financial position and performance of a group of related companies (clause 2, article 1 of the Law of July 27, 2010 No. 208-FZ). In this recommendation, you will find out which organizations and under what conditions prepare consolidated financial statements.

Important: Consolidated financial statements under IFRS do not replace ordinary financial statements. An organization that generates consolidated financial statements is still obliged to draw up and submit financial statements in accordance with the Law of December 6, 2011 No. 402-FZ (part 2 of article 3 of the Law of July 27, 2010 No. 208-FZ).

Who is required to report under IFRS

An organization is required to form consolidated financial statements in accordance with IFRS if it simultaneously:

controls one or more companies. Such an organization is called the parent, and those controlled by it are called subsidiaries. However, there are exceptions when the parent company is not required to prepare consolidated financial statements for the group;

constituent documents;

own initiative.

Credit organizations

parent credit institution of the banking group;

parent organization of a banking holding;

Insurance organizations

Consolidated financial statements under IFRS rules are insurance companies that form a group. These are parent companies.

An exception is medical insurance organizations that operate exclusively in the field of compulsory medical insurance. They do not need to prepare financial statements under IFRS.

Consolidated financial statements according to IFRS rules are made by NPFs, which form a group. These are parent companies.

UK IF, PIF, NPF

Consolidated financial statements in accordance with IFRS rules are management companies:

investment funds;

mutual investment funds;

non-state pension funds.

Important: management companies of IFs, mutual funds and NPFs are not required to prepare consolidated financial statements in accordance with IFRS for the funds themselves (information of the Ministry of Finance of Russia No. OP 6-2015, Information message of the Bank of Russia dated October 30, 2014).

Clearing organizations

Consolidated financial statements under IFRS are:

central counterparty;

the clearing house that forms the group. These are parent companies.

Federal State Unitary Enterprise according to the list of the Government of the Russian Federation

Joint-stock companies according to the list of the Government of the Russian Federation

Issuers

Consolidated financial statements under IFRS are issued by issuers that form a group. These are parent companies. However, under certain conditions, such parent companies may be exempted from the obligation to prepare consolidated financial statements in accordance with IFRS.

The main condition is that their securities are admitted to organized trading by including them in the quotation list. This follows from clause 8 of part 1 of article 2 of the Law of July 27, 2010 No. 208-FZ, instructions of the Bank of Russia of September 1, 2014 No. 3374-U, Information of the Ministry of Finance of Russia of April 17, 2015 No. OP 6-2015.

Other organizations

Consolidated financial statements under IFRS are:

issuers that form a group, in case of registration of a prospectus, admission of exchange-traded bonds or Russian depository receipts to organized trading with the presentation of a prospectus of these securities to the exchange. These are parent companies. If the issuer does not have entities controlled by it, reporting under IFRS rules can be omitted (clause 4, article 30 of the Law of April 22, 1996 No. 39-FZ, clause 2.1, article 5 of the Law of November 21, 2011 No. 325-FZ, Clause 3 of Appendix 4 to Bank of Russia Regulation No. 437-P dated October 17, 2014);

the state company "Russian Highways" (part 6 of article 17 of the Law of July 17, 2009 No. 145-FZ);

state corporation Rosatom (clause 3, part 4, article 34 of the Law of December 1, 2007 No. 317-FZ);

state corporation "Rostec" (part 6 of article 8 of the Law of November 23, 2007 No. 270-FZ);

the state corporation Roscosmos (part 1 of article 35 of the Law of July 13, 2015 No. 215-FZ);

a single development institution in the housing sector (part 2 of article 2 of the Law of July 27, 2010 No. 208-FZ.

Who is exempt from CFA

For some organizations, the law made an exception, freeing them from the obligation to prepare consolidated financial statements. However, we note right away that this does not apply to credit and insurance organizations, non-state pension funds, management companies of investment funds, mutual funds and non-state pension funds, as well as clearing organizations (clause 3 of the order of the Ministry of Finance of Russia dated December 28, 2015 No. 217n). They cannot use the right to exemption from consolidated reporting.

So, who has the right not to draw up a CFA by virtue of the Law of July 27, 2010 No. 208-FZ?

1. Public sector organizations.

2. A parent company that satisfies all of the following conditions:

it is itself a subsidiary. It is wholly or partly owned by another organization. All of its other owners, including those who otherwise do not have the right to vote, have been informed that the parent entity will not present consolidated financial statements and do not object to this;

debt and equity instruments of the parent organization are not traded on the open market (on a domestic or foreign stock exchange or on the over-the-counter market, including local and regional markets);

the parent has not filed and is not in the process of filing its financial statements with a securities commission or other regulatory body for the purpose of issuing any class of instruments on the public market;

the ultimate parent or any intermediate parent of that parent prepares financial statements in accordance with IFRS. Reporting is available for public use. In these financial statements, subsidiaries are consolidated or measured at fair value through profit or loss in accordance with IFRS 10.

How to determine that a subsidiary is not material, see When a subsidiary can be considered immaterial and not taken into account when consolidating financial statements under IFRS rules.

When to audit

In particular, a statutory audit is carried out if the organization is:

joint-stock company;

a professional participant in the securities market or the organization's securities are admitted to organized trading;

insurance company;

non-state pension fund (or its management company);

credit institution;

public company.

For all other organizations (with the exception of authorities, as well as state (municipal) institutions), an audit is mandatory if, for example:

the organization provides (discloses) consolidated accounting (financial) statements (except for the state off-budget fund);

the organization provides (discloses) interim consolidated financial statements;

the volume of proceeds from the sale of products (goods, works, services) for the previous reporting year exceeds 400,000,000 rubles. (except for agricultural cooperatives and their unions, as well as state (municipal) unitary enterprises);

the amount of balance sheet assets at the end of the previous reporting year exceeds 60,000,000 rubles. (except for agricultural cooperatives and their unions, as well as state (municipal) unitary enterprises);

such an obligation is enshrined in other federal laws (for example, for issuers of securities, the obligation to conduct an audit is established by paragraph 9 of Article 22 of the Law of April 22, 1996 No. 39-FZ, and for organizers of gambling

“CCP should be used only in cases where the seller provides the buyer, including its employees, with a deferral or installment plan for paying for their goods, works, services. It is these cases, according to the Federal Tax Service, that relate to the provision and repayment of a loan to pay for goods, work, and services. If an organization issues a cash loan, receives a return of such a loan, or itself receives and repays a loan, do not use the cash desk. When exactly you need to punch a check, look at

When is an organization required to conduct an audit? Mandatory audit of financial statements must be carried out by accredited rights management organizations on a collective basis (authors' societies).

Question: Our organization has subsidiaries and, in accordance with the Federal Law “On Consolidated Financial Statements” dated July 27, 2010 No. 208-FZ, it must prepare consolidated statements. If an organization draws up consolidated financial statements, then it is obliged to undergo a mandatory audit (the basis of paragraph 1 of Article 5 of the Federal Law of July 27, 2010 N 208-FZ (as amended on July 26, 2019) "On Consolidated Financial Statements"; paragraphs 5, paragraph 1 of Article 5 of the Federal Law of December 30, 2008 N 307-FZ (as amended on April 23, 2018) "On Auditing")? Is the annual reporting of a subsidiary subject to statutory audit if the parent organization, on the basis of paragraph 1 of Article 5 of the Federal Law of July 27, 2010 N 208-FZ (as amended on July 26, 2019) "On Consolidated Financial Statements" draws up consolidated statements? At the same time, the subsidiary does not meet the criteria of paragraph 1 of Article 5 of the Federal Law of December 30, 2008 N 307-FZ (as amended on April 23, 2018) "On Auditing".

Answer: No, the reporting of a subsidiary is not subject to mandatory audit on the specified basis, because the subsidiary company does not file a CFA.

The obligation to conduct an audit is assigned to organizations that pass the CFA. That is, in your case, this is the parent organization, because. it is she who submits the CFA. The subsidiary organization does not pass the CFA, and therefore is not obliged to conduct an audit on this basis.

In this case, one should proceed from the literal wording of sub. 5 hours 1 art. 5 of Law No. 307-FZ:

"…If organization (with the exception of a public authority, a local government, a state off-budget fund, as well as a state and municipal institution) presents and/or discloses annual summary (consolidated) accounting (financial) statements”.

Your subsidiary does not represent or disclose the CFA.

Rationale

When is an organization required to conduct an audit?

Who should audit

All cases when it is necessary to conduct a mandatory audit are given in Part 1 of Article 5 of the Law of December 30, 2008 No. 307-FZ.

In particular, a mandatory audit is carried out by:

Joint stock companies;

Professional participants in the securities market or organizations whose securities are admitted to organized trading;

Insurance companies;

Non-state pension funds or NPF management companies;

Credit organizations;

Public law companies.

In addition, a mandatory audit of financial statements must be carried out by accredited rights management organizations on a collective basis (authors' societies). Organizations are required to publish statements together with the auditors' opinion on their official websites no later than 10 business days following the date of receipt of the audit report, but no later than December 31 of the year following the reporting one. This is provided for by paragraph 6 of Article 1244 of the Civil Code.

For all other organizations, an audit is mandatory if, for example:

The organization provides (discloses) consolidated accounting (financial) statements (except for the state off-budget fund);

The organization provides (discloses) interim consolidated financial statements;

The volume of proceeds from the sale of products (goods, works, services) for the previous reporting year exceeds 400,000,000 rubles. (except for agricultural cooperatives and their unions, as well as state (municipal) unitary enterprises);

The amount of balance sheet assets at the end of the previous reporting year exceeds 60,000,000 rubles. (except for agricultural cooperatives and their unions, as well as state (municipal) unitary enterprises);

Such an obligation is enshrined in other federal laws (for example, for issuers of securities, the obligation to conduct an audit is established by paragraph 9 of Article 22 of the Law of April 22, 1996 No. 39-FZ, and for organizers of gambling by part 12 of Article 6 of the Law of December 29, 2006 No. 244-FZ) .

A complete list of cases of mandatory accounting audit for 2018, indicating the type of audited reporting and possible auditors, is given in

Branches and divisions of LLC are not legal entities. LLC presents accounting (financial) statements prepared in accordance with Russian accounting rules for the company as a whole. The financial statements are not prepared under IFRS and do not indicate that they are consolidated. The charter of an LLC does not provide for the preparation of consolidated financial statements in addition to Russian financial statements.
At the same time, the company does not meet the criteria for a mandatory audit, given in Art. 5 of the Federal Law of December 30, 2008 N 307-FZ "On Auditing", with the exception of the preparation of consolidated financial statements.
Is an LLC required to conduct a mandatory audit?

After considering the issue, we came to the following conclusion:
In the analyzed situation, LLC is not subject to mandatory audit, since the accounting (financial) statements compiled and submitted by it are not consolidated.

Rationale for the conclusion:
First of all, it is necessary to find out whether the accounting (financial) statements submitted by the LLC are consolidated.
According to Federal Law No. 208-FZ of July 27, 2010 "On Consolidated Financial Statements" (hereinafter referred to as Law No. 208-FZ), consolidated financial statements of organizations are prepared in accordance with International Financial Reporting Standards (IFRS).
On the territory of Russia, the standards and Interpretations of IFRS adopted by the IFRS Foundation and recognized in the manner established by the Government of the Russian Federation are applied. In particular, IFRS 10 "Consolidated Financial Statements" (the Russian Ministry of Finance dated December 28, 2015 N 217n) was put into effect.
International Financial Reporting Standard (IFRS) 10 Consolidated Financial Statements requires an entity (parent) that controls one or more other entities (subsidiaries) to present consolidated financial statements. We see that, according to IFRS, the presentation of consolidated financial statements is provided only for groups of several independent organizations.
For the purposes of N 208-FZ, consolidated financial statements are systematized information reflecting the financial position, financial performance and changes in the financial position of an organization, which, together with other organizations and (or) foreign organizations, in accordance with International Financial Reporting Standards, is defined as a group (of the Law N 208-FZ). Thus, N 208-FZ, the preparation of consolidated financial statements is also provided for groups of several legal entities.
Organizations to which N 208-FZ applies are indicated in Part 1 of Art. 2 of said law. At the same time, Law N 208-FZ determines that if federal laws provide for the preparation and (or) presentation and (or) publication of consolidated financial statements (consolidated financial statements, consolidated (consolidated) statements and balance sheet) or if the constituent documents an organization not specified in Law N 208-FZ provides for the presentation and (or) publication of consolidated financial statements, such statements are prepared in accordance with N 208-FZ.
According to Law N 208-FZ, the consolidated financial statements of an organization are prepared along with the accounting (financial) statements of this organization, compiled in accordance with N 402-FZ dated 06.12.2011 "On Accounting" (hereinafter - Law N 402-FZ). Accordingly, consolidated financial statements prepared in accordance with IFRS do not replace Russian financial statements prepared in accordance with N 402-FZ.
As we understood from the clarifications to the question, LLC does not apply to organizations named in Law N 208-FZ. Accordingly, an LLC is not required to prepare, present and publish consolidated financial statements. Since the constituent documents of an LLC do not provide for the preparation of consolidated financial statements, there is no obligation to form them in accordance with the provisions of Law N 208-FZ.
Currently, according to clarifications to the question, the LLC prepares and submits financial statements in accordance with Russian legislation and does not present other statements. Therefore, it is impossible to call the accounting (financial) statements of an LLC prepared in accordance with Russian accounting rules "consolidated".
Thus, the LLC does not currently present consolidated financial statements, since under Russian law, as well as under IFRS, it is not required to do so.
Since there are no other grounds for conducting a mandatory audit of the accounting (financial) statements of an LLC, an LLC is not subject to a mandatory audit.

We also recommend that you familiarize yourself with the materials:
- . Mandatory audit of annual accounting (financial) statements;
- Borisov A.N. Commentary to No. 208-FZ dated July 27, 2010 "On Consolidated Financial Statements" (second edition, revised and supplemented). - "Business Yard", 2017

Prepared answer:
Legal Consulting Service Expert GARANT
auditor, member of the Russian Union of Auditors Mikhail Bulantsov

Answer passed quality control

The material was prepared on the basis of an individual written consultation provided as part of the Legal Consulting service.

One of the time-consuming and relevant audit tasks in the light of recent changes in legislation and in the economic situation in the Russian Federation is the audit of consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS). Consider the purpose, composition and set of issues that arise during the audit of such reporting.

Consolidated financial statements is compiled by a group of companies to meet the information needs of various stakeholders and serves as the basis for such individuals to make economic decisions. Therefore, such reporting must contain reliable information about the results of the financial and economic activities of the group of companies, and the reliability of such information must be confirmed by an independent audit.

Currently, large Russian groups of companies compile such reports at the request of various structures - banks, stock exchanges, shareholders. In the near future, with the adoption of the Law "On Consolidated Financial Statements", such reporting will be mandatory for groups of companies whose shares are listed on the stock exchange. Also, according to the draft law, such reporting will be required to undergo an audit.

In the International Standards on Auditing (ISAs), the objective of an audit is expressed as follows: “The objective of an audit of financial statements is to enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, and in accordance with established financial reporting principles.” Under IFRS, consolidated financial statements fall within the definition of financial statements. Therefore, the objective of an audit of consolidated financial statements prepared in accordance with IFRS is to express the auditor's opinion whether the consolidated financial statements are prepared, in all material respects, in accordance with IFRS.

The subject matter of the opinion is the consolidated financial statements as a whole, i.e. the totality of all its constituent elements. Therefore, the IFRS consolidated financial statements are free from misstatement when the following conditions are met:

The composition of the group of companies is determined based on the requirements of IFRS;

The unified accounting policy of the group of companies for the purposes of consolidation has been drawn up taking into account all the requirements and changes in IFRS;

IFRS reporting of subsidiaries is based on RAS reporting, which does not contain distortions, taking into account the requirements of a single accounting policy;

The consolidation process went without errors, taking into account all the requirements of IFRS;


Additional information is disclosed in the consolidated financial statements in accordance with the requirements of IFRS.

During the audit of the consolidated financial statements prepared in accordance with IFRS, the following main tasks should be solved.

1. Checking the justification for including subsidiaries in a group of companies for the purposes of consolidation.

2. Checking the reflection of IFRS principles in the unified accounting policy of the group of companies for the purposes of consolidation.

3. Verification of the correctness of the preparation of financial statements by subsidiaries of the group:

Financial reporting in accordance with Russian Accounting Standards (RAS);

Financial statements according to IFRS.

4. Verification of the correctness of the process of consolidation and receipt of consolidated financial statements in accordance with IFRS.

5. Verification of the completeness of information disclosure in the notes to the consolidated financial statements in accordance with IFRS.

The audit of consolidated financial statements prepared in accordance with IFRS is carried out on the basis of the following legislative and regulatory documents that form the information base of the audit.

1. International auditing standards.

2. International Financial Reporting Standards.

3. Civil Code of the Russian Federation 4 hours

4. Tax Code of the Russian Federation, Parts 1 and 2.

5. Federal Law “On Auditing Activities” No. 307-FZ dated December 30, 2008 (as amended on December 28, 2010.)

6. Federal Law “On Accounting” No. 129-FZ dated November 21, 1996 (as amended on September 28, 2010)

7. Regulation on accounting and financial reporting in the Russian Federation (Order of the Ministry of Finance of the Russian Federation No. 34n dated July 29, 1998) (as amended on 10/25/10.)

8. PBU 1/08 "Accounting policy of the organization", approved by order of the Ministry of Finance of Russia dated 06.10.2008 No. 106n (as amended on 08.11.10.)

9. Chart of accounts for financial and economic activities of organizations and Instructions for its application (Order of the Ministry of Finance of the Russian Federation No. 94n dated October 31, 2000) (as amended on 08.11.10.)

10. Order of the Ministry of Finance of the Russian Federation “On the Forms of Accounting Statements of Organizations” No. 67n of July 22, 2003 (as amended on November 8, 2010) (for reporting for 2010 and earlier).

11.Order of the Ministry of Finance of the Russian Federation "On the forms of financial statements of organizations" No. 66n dated July 02, 2010

Sources of information used in the audit of the consolidated financial statements under IFRS:

I. Organizational and administrative documents:

Charter of the parent company, charters of subsidiaries;

Accounting policies of subsidiaries and parent companies, accounting policies for the purposes of consolidating the financial statements of a group of companies under IFRS;

Chart of accounts of subsidiaries and parent companies;

Intragroup procedures for documentation, processing of accounting information, preparation of financial statements, consolidation of financial statements.

II. Reporting of the group of companies:

Accounting statements according to RAS of companies included in the group of companies for the reporting and previous periods;

Financial statements in accordance with IFRS of companies included in the group of companies for the reporting and previous periods;

Consolidated financial statements prepared in accordance with IFRS for the reporting and previous periods.

III. Confirming information:

Oral and written approval of the management of the group of companies, top management of the parent and (or) subsidiaries;

Working documents of the auditor and correspondence with the client for the past years, if the client is regular;

Correspondence of the client with the tax authorities, acts of tax audits;

Accounting data and supporting information, including contracts, primary documents and confirmations from third parties;

Audit reports of previous years.

When preparing consolidated financial statements in accordance with IFRS, various omissions, errors, and inaccuracies are possible.

Basic typical mistakes when determining the structure of a group of companies are listed below.

1. Inclusion in the group of companies of only national subsidiaries.

2. Exclusion from the group of companies of subsidiaries in which the parent company does not own more than 50% of the shares, but there is clear control over the subsidiary.

3.Inclusion in the group of companies of subsidiaries in which the parent company owns more than 50% of the shares, but there is no control over the subsidiary.

4. Inclusion in the group of subsidiaries, control over which is temporary.

5. Inclusion in the group of subsidiaries that operate under strict long-term restrictions that significantly reduce control.

Exclusion from the group of subsidiaries due to the difference in their activities from the activities of other companies in the group.

At reporting under IFRS by companies that are part of a group of companies, the following errors are possible.

1. When accounting for fixed assets, the requirements of the accounting policy for the purposes of consolidation in the area of ​​the minimum cost of fixed assets, which differs from the requirements of RAS, are not taken into account.

2. When calculating depreciation, the same method is used as in RAS. Depreciation is also charged on those fixed assets that, according to IFRS, are not fixed assets.

3. When accounting for inventories, adjustments were not recalculated in accordance with the accounting policy for the purposes of consolidation.

4. When transferring business transactions to the chart of accounts according to IFRS, an incorrect transfer occurs if one account according to RAS corresponds to several accounts according to IFRS.

5. When recalculating transactions in foreign currency, the requirements of IFRS and accounting policies for the purposes of consolidation are not observed.

6. When calculating reserves (for bad faith debtors, for depreciation of securities, for guaranteed return of goods), the requirements of IFRS and accounting policies for the purposes of consolidation are not observed.

7. When calculating deferred income tax, errors occur due to incorrect determination of the components of deferred tax.

8. With regard to business transactions, the principle of their reflection in the reporting period in which they are actually carried out is not always observed. Especially for business transactions that are billed late.

9. Accounting for leased fixed assets, which are accounted for in RAS on off-balance accounts of the lessee, does not take into account the requirements of IFRS.

10. In the interpretation of restricted cash, a failure to comply with the IFRS requirement to account for such cash in a separate long-term asset account.

11. When carrying out transactions with securities with the terms of their repurchase - failure to comply with the requirements of IFRS for accounting for such transactions as transactions for obtaining a loan.

When using IFRS principles in the consolidation process mistakes are like that.

1. Companies belonging to a group of companies do not sum up the reconciliation of balances on the accounts of intra-group settlements.

2. Arithmetic errors in item-by-item summation of the reporting of subsidiaries.

3. Errors in the process of calculating the minority interest due to changes in the equity of a subsidiary.

4. Mistakes in winding up the book value of the parent company's investments in subsidiaries and replacing it with the value of a part of the subsidiary.

5. Inaccuracies in the CFD due to errors in the automated reporting system.

6. Notes to the QFA do not disclose events after the balance sheet date.

7. The notes to the FSC do not disclose the nature of the relationship between related parties.

8. Notes to the QFA do not fully disclose information about the group of companies.

The notes to the FSC do not fully disclose information about the functional currency and the reasons for reporting in a non-functional currency.