Most common mistakes made by companies under IFRS 10
- Incorrect Assessment of Control
- Not Eliminating Intercompany Transactions
- Incorrect Calculation of Non-Controlling Interest (NCI)
- Not Recognizing Goodwill Properly
- Failure to Eliminate Intercompany Balances
- Incorrect Treatment of Dividends Within the Group
- Not Adjusting for Uniform Accounting Policies
- Incorrect Foreign Currency Translation
- Ignoring Step Acquisitions or Partial Disposals
Key implications of incorrect consolidation:
- Misstated financials – Assets, liabilities, revenue, and profits may be incorrectly reported.
- Incorrect profit reporting – Intercompany transactions not eliminated can inflate revenue or income.
- Equity errors – Non-controlling interest and retained earnings may be inaccurate.
- IFRS non-compliance – Breach of IFRS 10 requirements.
- Audit and reputational risk – May lead to audit qualifications, restatements, and reduced stakeholder confidence.