Consolidation Research Paper Example | Topics and Well Written Essays - 750 words

Consolidation - Research Paper Example Throughout the article, KWG, or the German Banking Act, which has detailed regulations on how consolidation accounting for financial institutions should be carried out is used to demonstrate these regulatory discrepancies with regard to the IFRS (International Financial Reporting Standards) (Xuccess Reply, 2012). The article goes on to recommend that extensive changes in the way procedures are implemented and data processing is carried out when it comes to consolidation accounting be implemented in order to overcome some of these challenges. Getting rid of these challenges, the article proposes, will result in better conversion of consolidation accounting processes. The chief issue being discussed in the article is how discrepancies in accounting for consolidations in relation IFRS (International Financial Reporting Standards) poses challenges that require considerable changes in how procedures and technical data processing takes place. German Banking Act (KWG) is used to demonstrate how these differences pose numerous challenges. KWG and IFRS differ in how they view consolidation groups. Some companies that are part of the regulatory consolidation group under KWG regulations do not qualify as consolidation groups under IFRS regulations. This presents challenges since deconsolidation as well as other changes are necessary to reconcile the regulatory provisions of one body with the other (Xuccess Reply, 2012). KWG refers to a subsidiary in the context of consolidation accounting as a company that presents the possibility of being controlled by the parent company through majority voting rights, executive control, and so forth. These conditions are also subsumed under the IFRSs definition of a subsidiary company (Xuccess Reply, 2012). However, the concept of control under IFRS regulations distinctively says that the parent company has to have