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The purpose of this paper is to chart, analyse and attempt to explain, the changes in the scope of consolidation over the last century in national and transnational regulations. It first concentrates on the four countries which have been the main drivers of change (the USA, the UK, Germany and France) and then on the transnational regulations of the EU and International Accounting Standards Board (IASB). This issue is of great topical importance (e.g. the IASB's standard on consolidation of 2011).

The author synthesises the literature and then analyses the extensive set of accounting requirements over a century from the four countries, the EU and the international standard setters. Three theoretical perspectives (transnational operations, financing and diffusion of ideas) are assessed as explanations for the developments.

Definitions of subsidiary have ranged from the simple to the byzantine, including poor use of such words as “control” and “power”. Over time, there have been many types of exclusion from consolidation (e.g. based on lack of ownership, lack of control, dissimilarity or foreignness), but the scope has gradually widened. In terms of the conventional understanding of international accounting differences, the US concentration on ownership and the German concentration on control are unexpected. However, the theoretical perspectives allow an explanation, largely in terms of financing and diffusion of ideas rather than transnational operations.

Policy implications concern the improvement in the use of such terms as “control” and “power”. Suggestions are made for clarifying the scope of consolidation.

This is the first paper to analyse the scope of consolidation over a century up to the present on a transnational basis, and the first to seek to explain the developments in a theoretical context.

The purpose of this paper is to investigate the association between the use of a computerised learning tool (specifically designed to teach consolidation accounting) and student performance in the final examination of an undergraduate accounting unit on Corporate Accounting.

A regression model was developed to analyse 1,103 observations of assignment and examination scores, collected over three semesters, to test the central proposition that computer assisted learning enhances student learning outcomes and performance in the exam.

The results show a positive and significant relationship between the computerised accounting assignment on consolidated accounting (linked to usage of the computerised tool) and the consolidation question in the final examination. The findings suggest that the computerised consolidation accounting package (CCAP) assists students to understand the concepts underpinning consolidation accounting.

The data were collected from a single institution, which may not represent the population of accounting students. Due to ethical obligations, the study lacked a control group that would have allowed meaningful comparison and assessment of student performance. Furthermore, whilst the findings in this study were able to demonstrate a positive association between the CCAP and exam performance, it is unable to determine the quality and depth of the learning experience from using the CCAP.

The present study found that a CCAP and its usage has the potential to positively impact student performance on assessment tasks on subject matter similar to concepts contained the computer package. Such findings may encourage instructors to seek ways of incorporating learning technologies in the pedagogical design.

This is believed to be one the few papers that has exclusively studied the impact of a specific CCAP and a specific segment in accounting education (consolidation accounting) using direct measures, CCAP assignment score and the final examination score for a question dedicated to consolidation accounting.

The purpose of this study is to provide an overview of the adoption status of International Public Sector Accounting Standards (IPSAS) within Organisation for Economic Co-operation and Development (OECD) member states at the country level and highlight the main factors impeding the process of accounting harmonisation.

This study uses factor analysis (FA) to assess the status of IPSAS adoption as the weighted average of the adoption levels of three categories: central government, sub-national governments, and country-level consolidation. Based on this assessment, the sample is classified into three levels of IPSAS adoption: high, medium, and low.

The findings suggest a slow trend towards accounting harmonisation and an increasing influence of IPSAS. However, evidence also suggests significant limitations in the adoption of the standards, mainly attributed to national adaptations, which undermine the ongoing efforts for standardisation.

This study provides an integrated view of IPSAS adoption at the country level and sheds light on a different aspect of the international harmonisation process, which is missing from the literature.

The paper focuses on the potential benefits of fair value accounting (FVA) in the public sector and the shift towards the entity theory of consolidation supported by international accounting standards. The analysis of the Italian cases shows neither adjustments of the assets to their fair value, nor any recognition of intangibles other than goodwill in consolidated financial statement (CFS), maintaining the configuration of a municipal corporate group based on historical costs. These findings suggest a lack of focus on FVA by local governments (LGs), which is in contrast with international accounting standards. Using a combination of sources (such as annual reports and interviews), part of this paper is based on multiple-case studies of Italian LGs on the voluntary adoption of CFS.

This article provides an analysis of the economic incentives and financial reporting for Special Purpose Entities (SPEs) over the last four decades. The analysis explains economic factors motivating business use of SPEs and the origins of SPEs in lease accounting and securitization transactions. Related financial reporting standards are identified and discussed, including the historical shift from a traditional control viewpoint to a primary beneficiary viewpoint for financial reporting for consolidation for SPEs (recently renamed Variable Interest Entities (VIEs) in U.S. Financial Accounting Interpretation 46R). The article also includes illustrative journal entries explaining SPE transactions from both the viewpoint of the creating company(s) and the SPE. Actual financial reporting examples and/or journal entries for SPEs created by Bank of America, General Motors Acceptance Corporation, Lucent Technologies and Alza Pharmaceuticals Corporation are also provided.

This study aims to fill the research gap regarding the usability of group reporting information in the central government. It answers the question of how the consolidated information should be formed to benefit the real needs of governmental information users.

The empirical research is based on a survey and interviews among key internal preparers and users in the central government sector in the case country, Finland.

Results show that the private sector approach regarding consolidation is not appropriately transferable to the central government sector. The key stakeholders identified several economic and financial reporting needs that exceed what formal Consolidated Financial Statement (CFS) can offer. Consolidation is needed but not according to the extensive full control approach, but rather following the budgetary approach consolidating units of the legal person of the government, and further using the partial control approach for consolidating by discretion essential special purpose SOEs.

Respondents and interviewees represented governmental internal organisations, free experts, auditors and financial managers from the group entities. Politicians and citizens were not directly represented.

Research gives applicable insights into central governments planning and developing group reporting for information needs in a favourable cost-benefit ratio. Findings benefit the development of EU's EPSAS (European Public Sector Accounting Standards) project which is still incomplete.

Research recommends governments to make a thorough analysis before deciding on a new financial reporting system. A critical analysis prevents governments to waste money and resources on a reporting system not fulfilling the real needs of information users.

The value of this research is that the private sector approach in consolidation was not taken as granted. This study investigated critically and empirically the real need for consolidated information serving steering and overseeing purposes of the government's group entities.

The purpose of this paper is to review and analyze the literature on consolidated financial statements (CFS) in the public sector published from 1980 to 2015 in public sector accounting and management journals, and propose a future research agenda.

Adopting a structured literature review methodology, the authors investigate how the CFS literature is developing and what its focus is.

The authors identify five major topics: the definition of the consolidation area; the identification of the reporting entity; the private vs public sector accounting standard dichotomy; the relationship with the statistical rules; and the usefulness of CFS.

The authors analyze these topics, highlighting the growing implementation of CFS in different contexts (mainly focusing on governments outside the USA) and provide suggestions for future research.

The purpose of this paper is to investigate how the adoption of IFRS 10 and IFRS 11 affected consolidated financial statements. Specifically, the paper explores whether entities adopted mandatorily or voluntarily both IFRS, whether expressly declared effects, whether considered those effects as material and whether those effects had impacts on selected items of financial statements and on selected financial ratios.

The research is an exploratory study using public entities from Germany, France and the UK. The majority of the data is manually collected from financial statements.

The results suggest that the adoption of the new IFRS 10 affected the composition of a large number of entity groups but that their financial information and economic-financial indicators do not present material changes. There is also evidence of a large and material impact on the changes in the classification and accounting for interests in arrangements under joint control through the new IFRS 11. The evidence thus suggests unequal effects of the adoption of IFRS 10 and IFRS 11 on the proportion of entities declaring materiality of effects, on the quantitative effects on selected items of financial statements, and on financial ratios. A comparison between the pre-adoption and post-adoption periods reveals that the majority of the effects are driven by the adoption of IFRS 11.

As far as is known this exploratory paper is the first presenting the effectiveness of adopting the most important standards under the “consolidation package” and opens an avenue for future research by academics, for future post-implementation reviews by IASB, and for analysis of peer reviews between accounting practitioners.

The purpose of this paper is to investigate donor responses to discretionary accounting information consolidation. Nonprofit (NP) financial statement consolidation discretion significantly impacts program ratio reporting, the primary NP performance measure. Stakeholders are misled to allocate limited resources inefficiently. While some NPs file group Internal Revenue Service (IRS) Form 990 returns with their affiliates, effectively providing consolidated statements, others choose to file independently of their affiliates.

The authors use OLS regression analysis and panel data for 5,697 NP-year observations for the period 2009-2011 retrieved from the National Center for Charitable Statistics Form 990 database.

The authors find evidence that consolidation discretion substantially impacts donor decisions. NP managers have incentive to utilize consolidation discretion to influence charitable giving.

The authors urge the IRS and the Financial Accounting Standards Board to reconsider the consolidation guidance for NP organizations, to develop performance measures beyond the widely used program ratio, and to require program ratio segment reporting to allow for better comparability among NPs irrespective of consolidation status. Further, the authors caution stakeholders to consider supporting organization transactions in their resource allocation decisions.

The authors are the first to use NP supporting organization information to investigate consolidation discretion and its impact on donor responses.

The purpose of this paper is twofold. First, it aims to contribute to the theoretical discussion on shared service centres (SSCs) for public sector accounting by putting forth a novel typology of different SSCs and their creation modes, and outlining the challenges these specific models are likely to face. Second, it uses the Estonian case study to test the theoretical conjectures.

Since in the Estonian central government different reform models for creating SSCs for public sector accounting have been tried out, the Estonian case offers an opportunity for exploring what the motives behind the creation of different forms of SSCs can be and what kind of challenges reform actors can face when opting for different reform models. The sources of data for the qualitative case study included official documents, media articles and interviews.

The Estonian case study demonstrates that the distinct reform models for creating SSCs in public sector accounting can indeed have different motives and also face various challenges to different degrees. Some challenges, however, are present in all reform models (e.g. difficulties in achieving customer orientation and reduced input to managerial decision making).

This paper puts forth a novel typology of public sector SSC reform models and analyses the challenges these different reform models are likely to face. The theoretical contribution and the Estonian case study are valuable for both academics and practitioners analysing or considering the creation of SSCs.