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Hi mike, I know that Horizontal Groups are not required to produce Consolidated Financial Accounts. My question is What is the criteria for a Group to become “Horizontal” in the first place and could it be used as a “loop hole” to avoid preparing Consolidated Financials?
Where have you read the expression? It’s certainly not one that I have used!
Give me the context in which the expression has been used (other than “horizontal groups are not required to produce Consolidated Financial Accounts”)
2006 Pilot Paper Advanced Auditing (INT) Question 1(d) Discuss how ‘horizontal groups’ (ie non-consolidated entities under common control) affect the scope of an audit and the audit work undertaken.
Ah, ok. We’re heavily in to the area of related parties. Can it be a loophole to avoid preparing consolidated financial statements? Yes, I suppose in an extreme situation it may be. But common control by an individual is realistically unlikely and common control by a company would be covered by IFRS 10
In paper P7 I suppose you could find IFRS 10 appearing but the more likely aim of such a question would be the disclosures for related party transactions
2006 Pilot Paper was 9 years ago. Do you remember it raising its ugly head since than? No? Then it’s rather an unlikely topic for 2015
Thanks Mike. I just happened to look at the pilot paper and wanted clarification on this Horizontal thing. Agreed, it has not come up since the pilot paper, but knowing my luck I was just uncomfortable with the issue.
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