SEBI queries on accounts consolidation

It was on the basis of the Bhave committee recomendations that Sebi had in March this year made it mandatory for all listed companies to submit their quarterly results.

Mehta said their views are important as auditors have to approve theaccounts and DCA has to incorporate it in the Companies Act.

The existing Companies Act doesnot provide for a corporate to consolidate its group accounts. Though the new Companies Bill introduced in parliament last year has a provision for consolidation, it has still to be passed. Under this concept, the holding company instead of preparing separate annual accounts for itself and each subsdiary, can prepare a consolidated account for the group.

The move becomes important in view of instances where companies float subsdiaries and transfer funds from the holding company to subsdiaries.In many cases, the funds thus diverted never get reflected in the financial position of the parent company. The new provision will also help companies which have profit-making subsdiaries as networth of these subsdiairies are now not considered while calculating the value of the company.