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Shrenik Ltd. was set up initially as a private limited company. Subsequently, it got converted into a public company. The company's management has…

CA Final · Advanced Auditing, Assurance and Professional Ethics · MTP · May 2025

Shrenik Ltd. was set up initially as a private limited company. Subsequently, it got converted into a public company. The company's management has plans of expansion, but the business was not growing in an organic manner. Therefore, the management decided to acquire the competitors. During the financial year ended 31st March, 2024, the company acquired two companies in India and France in September, 2023 and January, 2024 respectively. The company controls both of these companies as per the criteria's laid down in the Companies Act, 2013 as well as the applicable accounting standards. The management started discussions with the auditors regarding the audits wherein it was also pointed out by the auditors that the management should also prepare consolidated financial statements, if they want. Management needs your advice on the same.

(A) Management must prepare the consolidated financial statements as per the requirements of the Companies Act, 2013.

(B) Management has a choice not to prepare consolidated financial statements but should go for that, considering that its true performance and financial position can then be demonstrated.

(C) Management could have prepared consolidated financial statements if the acquired companies would have completed at least one year post acquisition.

(D) Management must prepare consolidated financial statements, but it should include only the company acquired in India.

Shrenik Ltd. was set up initially as a private limited company. Subsequently, it got converted into a public company. The company's management has…

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