Reference no: EM133122611

Question - Respond to this letter - Most of the board members, including myself, are not qualified accountants. Our company is quite diverse, with a number of subsidiaries that have been acquired over the years. For the benefit of all board members to understand, we would like a clear explanation of how the companies in our Group become consolidated into one set of financial statements. Even though we have a CFO who prepares all this information for our Group, we would like an independent explanation of the process, including the rules or regulations that should be applied. Our companies also trade between each other in our Group. We are concerned that these dealings are not allowed. Would you please explain how to deal with such transactions?

The Board would also like to know how to account for a number of companies where we own 20% of their shares. We can't see valuations for these shares in the accounts, and therefore we were concerned that they have been missed in our reports. Would you please explain where this information should be disclosed and how these investments are valued?

Finally, the Board is quite concerned about the low value of goodwill in the Group accounts. Most of the companies in our Group have been trading for a long time. Other public companies have large Goodwill assets disclosed in their financial statements. The Board would like to know why our assets do not include a significant amount for Goodwill to represent our business value. Could you please advise the Board how to incorporate an increased amount of Goodwill into our financial statements for the upcoming Annual Reports? How can we maintain the value of the Goodwill in future?