Many Indian companies establish dedicated CSR trusts which serve as implementing agencies for CSR activities to fulfil their Corporate Social Responsibility (CSR) obligations. These entities are typically registered public trusts, societies, or companies incorporated under Section 8 of the Companies Act, 2013. In practice, they are often wholly owned or closely governed by the sponsoring company, which may also appoint key managerial personnel and trustees to oversee their operations. Such arrangement necessitates an evaluation of whether these implementing agencies meet the criteria for consolidation with the sponsor under Indian Accounting Standards (Ind AS). This edition of the Accounting and Auditing Update (AAU) features an article that discusses the consolidation of CSR trusts and implementing agencies under Ind AS.
In India’s evolving corporate landscape, intra-group mergers - particularly those involving subsidiaries and their parent companies - are gaining prominence as strategies for cost efficiency, tax optimisation, and structural simplification. These transactions are accounted for using the pooling of interests method as per Appendix C to Ind AS 103, Business Combinations. Under this approach, assets, liabilities, and reserves are recorded at their respective carrying amounts in the books of the merged entity. A key practical challenge arises in determining the appropriate source of carrying amounts - whether from the subsidiary’s standalone financials or the parent’s consolidated books. This publication features an article that outlines the key accounting considerations relevant to such common control mergers, with a focus on scenarios where a subsidiary merges into its parent.
As always, we have included a digest of recent regulatory updates in India and internationally.
We would be delighted to receive feedback/suggestions from you on the topics we should cover in the forthcoming editions of AAU.
For more information on this update, please write to aaupdate@kpmg.com.
