Proceedings of the 5th International Conference on Accounting, Auditing, and Taxation (ICAAT 2016)

Application of Professional Judgement by Russian and European Companies in Determining the Scope of Consolidation

Authors
Natalia Generalova, Ekaterina Popova
Corresponding Author
Natalia Generalova
Available Online December 2016.
DOI
https://doi.org/10.2991/icaat-16.2016.7How to use a DOI?
Keywords
Consolidated financial statements, IFRS, professional judgement, de facto control
Abstract
It is within the field of the accountant's professional substantial judgment application to determine whether the investor controls an investee. The research based on 237 consolidated financial statements in accordance with IFRS of Russian and European companies was aimed at revealing and comparing the impact of accountant's judgement on determination of the scope of consolidation. As a result, it has been found out that a considerable proportion of both Russian (40.0%) and European (43.93%) companies are governed by the judgement in determination of the control over an investee. IFRS 10 "Consolidated Financial Statements" contains principles of determination the existence of control de facto. Yet, the concept of "de facto" control can be interpreted by different accountants in various ways. The range of an accountant's interpretation of control is influenced (i.e. may "expand" or "taper") by companies's size and industry, local laws and other circumstances. Furthermore, this paper reveals factors owing to which the companies were entitled with the right to control the investee in accordance with "de facto" control in the absence of "de jure" control; also factors of the absence of "de facto" control with the majority voting rights in the subsidiary (in the presence of "de jure" control).
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Proceedings
5th International Conference on Accounting, Auditing, and Taxation (ICAAT 2016)
Part of series
Advances in Economics, Business and Management Research
Publication Date
December 2016
ISBN
978-94-6252-261-9
ISSN
2352-5428
DOI
https://doi.org/10.2991/icaat-16.2016.7How to use a DOI?
Open Access
This is an open access article distributed under the CC BY-NC license.

Cite this article

TY  - CONF
AU  - Natalia Generalova
AU  - Ekaterina Popova
PY  - 2016/12
DA  - 2016/12
TI  - Application of Professional Judgement by Russian and European Companies in Determining the Scope of Consolidation
BT  - 5th International Conference on Accounting, Auditing, and Taxation (ICAAT 2016)
PB  - Atlantis Press
SN  - 2352-5428
UR  - https://doi.org/10.2991/icaat-16.2016.7
DO  - https://doi.org/10.2991/icaat-16.2016.7
ID  - Generalova2016/12
ER  -