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Deloitte comment letter on ED 10 'Consolidated Financial Statements'

Published on: 20 Mar 2009

We recognise the importance of this project and fully support the objectives of issuing a single Standard for consolidation and improving the disclosure requirements relating to consolidated and unconsolidated entities. Furthermore, we believe that applying a single definition of control to all entities is the appropriate basis for the consolidation model.

However, the principles underlying the consolidation model proposed in the ED are not well established and the guidance within the ED is ambiguous and inconsistent in a number of fundamental areas, not least of which in the failure to distinguish between ‘power to control’ and ‘ability to control’. Without a clear definition of control, the resulting Standard will be difficult to interpret and apply on a consistent basis. As a consequence, the financial statements of groups will be less, not more, comparable and understandable. We do not believe that the ED in its current form is an improvement on existing IFRSs.

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