Consolidated XBRL Reporting under the Companies Act, 2013

 By CA Surekha S Ahuja

CSR Expenses, Related Party Transactions & Government Grants

(Legal Applicability, Consolidation Logic and MCA XBRL Compliance)

Objective of this Guidance Note

This Guidance Note provides a complete and practical framework for understanding and implementing Consolidated Financial Statements (CFS) in XBRL, with focused guidance on:

• Corporate Social Responsibility (CSR) expenditure

• Related Party Transactions (RPT)

• Government Grants

It also conclusively addresses a frequent misconception:

Whether filing Standalone Financial Statements in XBRL dispenses with the requirement to file Consolidated XBRL.

The note is aligned with:

• Sections 129 and 135 of the Companies Act, 2013

• Ind AS 110, 20, 24 and 37

• Schedule III

• MCA XBRL Taxonomy (latest applicable)

Whether Consolidated XBRL Is Mandatory if Standalone XBRL Is Filed

Settled Legal Position

Filing of standalone financial statements in XBRL does NOT substitute or eliminate the requirement to file consolidated financial statements in XBRL.

Statutory Reasoning

• Section 129(3) mandates preparation of consolidated financial statements where a company has subsidiaries, associates or joint ventures

• The Companies (Accounts) Rules require separate filing of standalone and consolidated financials

• MCA has prescribed separate AOC-4 filings and separate XBRL instances for:

  • Standalone financial statements

  • Consolidated financial statements

Practical Conclusion

Standalone XBRL and Consolidated XBRL are parallel statutory filings.
Compliance with one does not cure non-compliance with the other.

Core Concept to Understand Before Everything Else

Legal obligations arise at the entity level.
Consolidated financial statements present the group as a single economic unit.

Consolidation:

• does not create new statutory obligations, but

• aggregates and reports the financial impact of entities that already have obligations.

This distinction is critical for CSR, RPT and Government Grants.

CSR Expenses in Consolidated XBRL Reporting

CSR Applicability – Entity Level Only

CSR obligation under Section 135 applies only to companies that independently meet the prescribed thresholds.

• Holding company may be CSR-liable

• Some subsidiaries may be CSR-liable

• Some subsidiaries may not be CSR-liable

CSR obligation is never computed on consolidated profits.

Why CSR Appears in Consolidated Financial Statements

Under Ind AS 110, consolidated financial statements reflect the combined financial performance of the group.

Therefore:

• CSR expenditure incurred by CSR-liable entities is included in consolidated expenses

• CSR obligation and spending are aggregated for disclosure purposes only

Aggregation does not mean group-level applicability.

Mandatory CSR Disclosures (Schedule III & XBRL)

CSR disclosures are mandatory, numerical and comparative, not descriptive.

The following must be disclosed in consolidated XBRL:

• Amount required to be spent

• Amount actually spent

• Amount spent through:

  • Direct implementation

  • Group entities

  • Trusts / NGOs

• Unspent CSR amount (recognised as provision / liability)

Consolidation Logic for CSR (High-Risk Area)

• CSR expense is never eliminated in consolidation

• Only intra-group CSR funding transactions are eliminated

• Unspent CSR represents a present obligation under Ind AS 37 and must be recognised as a liability

The most common MCA/XBRL error is elimination of CSR expense instead of elimination of only the funding leg.

Related Party Transactions (RPT) in Consolidated XBRL

Scope of Related Parties in Consolidation

Under Ind AS 24, consolidated RPT disclosures must cover transactions with:

• Parent company

• Subsidiaries

• Associates and joint ventures

• Key managerial personnel of the parent and the group

• Relatives of KMPs

The disclosure universe expands in consolidation.

Elimination vs Disclosure – The Golden Rule

Aspect	Accounting Treatment	Disclosure Requirement
Intra-group sales/services	Eliminated	Must be disclosed
Management fees	Eliminated	Must be disclosed
CSR routed via subsidiaries	Eliminated	Must be disclosed
Loans/guarantees	Eliminated	Must be disclosed

Elimination removes duplication of numbers, not disclosure obligations.

RPT Disclosures in XBRL

RPT disclosures must be tabular, covering:

• Nature of relationship

• Nature of transaction

• Transaction amount

• Outstanding balances

• Whether transactions are at arm’s length

Blank RPT tables are a frequent cause of XBRL validation failure.

Government Grants in Consolidated XBRL

Recognition Principles

Government grants are recognised at the entity level under Ind AS 20 only when:

• There is reasonable assurance of compliance with conditions, and

• Receipt of the grant is reasonably certain

Consolidated Treatment

In consolidated financial statements:

• Grants received by subsidiaries are included

• Intra-group transfers of grant funds are eliminated

• Deferred government grants appear as consolidated liabilities

• Amortisation of grants is reflected in consolidated profit and loss

Mandatory Disclosures

Disclosures must include:

• Nature of grants

• Amount recognised as income

• Deferred grant balances

• Conditions attached to grants

Grant income and deferred grant liabilities must be tagged separately in XBRL.

Why CSR, RPT and Government Grants Are High-Scrutiny Areas

These areas attract regulatory focus because:

• They involve statutory compliance, not merely accounting policy

• They require cross-reconciliation between:

  • Computation

  • P&L

  • Notes

  • XBRL tags

• MCA validation tools perform internal consistency checks

Most failures arise from conceptual misunderstanding, not from XBRL software issues.

Practical Guidance for Review and Execution

For Partners (Oversight Perspective)

• Confirm consolidated XBRL is filed separately

• Validate CSR applicability entity-wise

• Ensure CSR expense is not eliminated

• Ensure RPT disclosures exist even where balances are nil

• Ensure grants are consistently recognised and tagged

For Article Teams (Execution Perspective)

• Understand legal applicability before consolidation

• Never suppress disclosures because of eliminations

• Always reconcile numbers across computation, notes and XBRL

• If in doubt, disclose rather than omit

Final Professional Position

Standalone XBRL fulfils entity-level reporting.
Consolidated XBRL fulfils group-level transparency.
Both are independently mandatory when applicable.

Correct consolidated XBRL reporting follows a clear sequence:

Law → Accounting → Consolidation → Disclosure → XBRL Tagging

Any deviation from this sequence creates compliance risk.

Closing Note

A clear conceptual understanding of CSR, RPT and Government Grants in consolidation ensures:

• Clean MCA validation

• Smooth audits

• Defensible regulatory positions

This Guidance Note may be relied upon as a standard internal reference for consolidated XBRL reporting.