CFS in Accenture Case Study

shivamshivhare
Posts: 4
Joined: Mon Sep 11, 2017 7:22 am

CFS in Accenture Case Study

Postby shivamshivhare » Tue Jan 09, 2018 7:09 am

When we start preparing the CFS in the Accenture case study, for CFO we begin with the income for Accenture PLC (excluding minority interest). As per the consolidation rule, all the Financial Statements are to be reported on the consolidated basis. Even in the Accenture's Annual Report, the CFO are reported on the consolidated basis as the beginning element is Consolidated Income.
Now even in our Model, we forecast the IS and BS on the consolidated basis. But why are we deviating from that rule?
Even if we report it after excluding minority interest, then remaining elements in the CFS needs to be adjusted for the minority interest. But we take them on the consolidated basis. So again, there would be an anomaly in this this too.
Please help me explain as to how it is correct to begin with Income Attributable to Accenture PLC?

edupristine
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Re: CFS in Accenture Case Study

Postby edupristine » Fri Jan 12, 2018 10:38 am

Generally, this is the solely discretion of the analyst who prepares the model, as to how he wanted to present such financial transactions of the business.

Here the Accenture model is the consolidated one, which has the impact of income accrued and earned form all its subsidiaries which is showing the significances & implications of minority interest indirectly manner in the Financial statement of Accenture.

The non-controlling interests in the net income of consolidated subsidiaries for the relative reporting period been identified and adjusted against the income of the group in order to arrive at the net income attributable to the owners of the parent, which is subsequently taken to the cash flow statement. The net increase in the income form subsidiaries/associated firms are added to the financing activities & not to the operation incomes.

And Non-controlling interest is presented separately in the consolidated balance sheet from liabilities and the equity of the parent’s shareholders.

shivamshivhare
Posts: 4
Joined: Mon Sep 11, 2017 7:22 am

Re: CFS in Accenture Case Study

Postby shivamshivhare » Fri Jan 12, 2018 7:14 pm

I'm not so sure if that's an analyst's call to deviate from the reporting standards and start with attributable to Accenture PLC's revenue rather than the consolidated revenue in the CFS's CFO.
Moreover, if we do begin with Attributable to Accenture portion in CFO, then other items in the CFO haven't been adjusted for the minority interest. They represent the consolidated entity. So looking at Cash Flow at Operations independently, the value would come out wrong.
Moreover, please help me explain the fact as to how can you possibly say that whatever is the minority income portion for the current period, we will just classify it as a form of financing and treat it as a Cash Flow from Financing Activities.
It would really help if you could share some relevant financial model where the minority interest is treated in the same way as in Accenture.
Plus any accounting standard where it says that we have the liberty to treat minority income portion as a cash flow from financing activity.

edupristine
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Re: CFS in Accenture Case Study

Postby edupristine » Sat Jan 13, 2018 10:29 am

1. Yes, your opinion is right. No analyst would call for any deviation w.r.t Principles & standards for preparation and presentation of financial statements.
One can apply his assumptions over the data to be projected (the numbers) if required, for the sake of making the model bit simpler, but cannot assume anything for reporting and presentation of books of accounts, since it has to be done on the basis of accounting principles.

2.Reasons for adding/taking minority impact:
Since we have not taken aggregated/comprehensive incomes to Consolidated CFS therefore we need not to make any further adjustments in computing CFO. By putting a single entry in financing activities will bring the impact of consolidation to the CFS.

3.You may refer AS 21 & IAS 27.

edupristine
Finance Junkie
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Joined: Wed Apr 09, 2014 6:28 am

Re: CFS in Accenture Case Study

Postby edupristine » Sat Jan 13, 2018 10:39 am

Enclosing sample models link for your reference
https://www.pg.com/annualreport2010/... ... al_Stateme.


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