| Engagement snapshot | |
|---|---|
| Client archetype | Holding company of a foreign-parented industrial manufacturing group, with a non-calendar financial year aligned to the parent's reporting |
| Service lines | Consolidated financial statement preparation · Financial reporting advisory (preparation, not audit) |
| Jurisdiction | Indonesia (PSAK reporting); parent-level reporting requirements out of scope |
| Engagement model | One-off, annual reporting cycle |
| Duration band | < 1 month from complete receipt of unit financials |
| Frameworks | PSAK 110 (IFRS 10) · PSAK 103 (IFRS 3) · PSAK 228 (IAS 28) · PSAK 212 (IAS 12) · PSAK 112 (IFRS 12) |
| Team shape | Partner-led; associate-partner project lead; accounting specialists |
What was the challenge?
The group's financial statements existed only unit by unit, so no single set of numbers could be given to the statutory auditors. Consolidation turns several trial balances into one reporting entity, and every unreconciled difference then surfaces as an audit query. The timeline was short and tied to the parent's reporting calendar.
| Challenge | Operational reality | Business risk |
|---|---|---|
| Unit data | Management supplied each entity's trial balance and chart of accounts, linked to prior-year numbers | Mis-mapped balances change classification in the group statements |
| Intra-group balances | Balances and trading between group entities had to be agreed and eliminated, including unrealised profit | Unreconciled differences and unrealised profit left in group assets |
| Acquisition accounting | Acquired subsidiaries needed fair-value, goodwill, non-controlling interest (NCI) and deferred tax workings | Goodwill and NCI that management cannot support to its auditors |
| Associates | A handful of associates had to be brought in under the equity method | Carrying amounts without a roll-forward |
| Auditor interface | Statutory auditors' queries had to be closed on a short timetable | Late audit closure for the parent's reporting cycle |
How did JCSS Indonesia approach it?
We reconciled and mapped every unit before consolidating, so the consolidation entries were few and explainable.
Data protocol. We agreed what management supplies: trial balances, chart of accounts and prior-year linking in spreadsheets. Management keeps accounting policies, judgements and the reporting format. The artefact was a data-request and responsibility matrix.
Chart-of-accounts mapping. We mapped each unit's accounts to the group chart of accounts used in the prior year, so classifications stay comparable. The artefact was a mapping workbook with a check to each unit's trial balance.
Intra-group reconciliation and elimination. We agreed intra-group balances and transactions between entities and eliminated them, with unrealised intra-group profit and losses, under PSAK 110 (IFRS 10). Intra-group losses were tested as impairment indicators, and unrealised profit on associate transactions was eliminated to the group's interest under PSAK 228. The artefact was a reconciliation matrix and elimination journals.
Acquisition accounting and NCI. We worked through the PSAK 103 (IFRS 3) steps: acquirer and acquisition date, fair values, goodwill or bargain purchase, and NCI. Deferred tax on fair-value adjustments followed PSAK 212 (IAS 12). The artefact was an acquisition schedule and NCI computation.
Associates. We applied the equity method under PSAK 228 (IAS 28) to each associate. The artefact was a carrying-amount roll-forward per associate.
Statements, disclosures and audit queries. We assembled the consolidated statements, notes and workings, including PSAK 112 (IFRS 12) disclosures, and answered the statutory auditors' queries from one workings file.
Why this approach: reconciling before consolidating moves differences to the unit that owns them. We rejected consolidating from unreconciled trial balances and booking plug adjustments afterwards. That is faster on day one, but it hides errors inside the group numbers, and the auditors then ask for the unit-level evidence anyway.
What were the results?
JCSS Indonesia delivered consolidated financial statements with schedules, notes and workings, prepared for audit by the statutory auditors.
| Result | What was delivered | Why it matters |
|---|---|---|
| Group statements | Consolidated financial statements with schedules, notes and workings | The auditors received one set of numbers, not unit-level files |
| Intra-group position | Reconciliation matrix and elimination journals | Designed so group results exclude internal trading |
| NCI and associates | Workings behind each NCI and each associate's carrying amount | Management can trace each balance to its basis |
| Audit closure | One reconciled pack and a query log | Built so auditor queries are answered from one file |
| Timeline | Workplan sequenced from complete receipt of unit financials | The sequence was built around the parent's reporting calendar |
Which frameworks and regulations applied?
- PSAK 110 (IFRS 10), consolidated financial statements: control, elimination and NCI. IFRS 10
- PSAK 103 (IFRS 3), business combinations: acquisition accounting, goodwill, NCI. IFRS 3
- PSAK 228 (IAS 28), associates and joint ventures: equity method. IAS 28
- PSAK 212 (IAS 12), income taxes: deferred tax on fair-value adjustments. IAS 12
- PSAK 112 (IFRS 12), interests in other entities: disclosures. IFRS 12
- IAI renumbering effective 01 Jan 2024: PSAK 110, 103, 228, 212, 112 · old-to-new comparison
- UU 5/2011, Art. 3(2): assurance services may be provided only by public accountants. UU 5/2011
Key takeaways for group CFOs and financial controllers
- Reconcile and map every unit before consolidating; a plug adjustment moves a difference, it does not resolve it.
- Support NCI and each associate with workings, so no balance is a residual of the consolidation.
- Cite the current PSAK number with its IFRS equivalent, and read older packs against the 2024 renumbering.
Frequently asked questions
Which PSAK numbers cover consolidation, business combinations and associates after the 2024 renumbering?
Since 01 Jan 2024, IAI numbers IFRS-referenced standards in the 100 and 200 series. Consolidated financial statements are PSAK 110 (formerly PSAK 65), business combinations PSAK 103 (formerly PSAK 22), associates PSAK 228 (formerly PSAK 15), income taxes PSAK 212 (formerly PSAK 46) and interests in other entities PSAK 112 (formerly PSAK 67).
When must a parent present consolidated financial statements under PSAK 110?
PSAK 110, adopted from IFRS 10, requires an entity that controls one or more other entities to present consolidated financial statements. Control, not ownership percentage, is the test. Unlike IFRS 10 paragraph 4(a), PSAK 110 does not exempt an intermediate parent whose own parent publishes consolidated statements. Whether a specific entity must file consolidated statements is a reporting question for management and its auditors.
How are associates carried in group financial statements?
Under IAS 28 (PSAK 228), an associate is carried by the equity method: initial recognition at cost, then adjustment for the investor's share of profit or loss, other comprehensive income and distributions received. Holding, directly or indirectly, 20% or more of the votes creates a rebuttable presumption of significant influence. Each associate therefore needs a carrying-amount roll-forward.
Why does deferred tax arise on fair-value adjustments made on consolidation?
IAS 12 (PSAK 212) requires deferred tax on temporary differences between an asset's or liability's carrying amount and its tax base, subject to specified exceptions. A fair-value adjustment on acquisition changes the carrying amount in the group accounts but not the tax base in a share acquisition, so a deferred tax balance usually follows and goodwill is affected. No deferred tax is recognised on the initial recognition of goodwill.
Is preparing consolidated financial statements an audit or assurance service?
No. JCSS Indonesia prepares the statements from management's trial balances and policies, and gives no audit, review or other assurance conclusion. Under Article 3(2) of UU 5/2011, assurance services may be provided only by public accountants. The statutory auditors audit the statements, and management remains responsible for them.