For financial year starting from 2016, the obligation to create consolidated accounts is adapted in order to harmonize it with the European legislation. What are the effects on your accounting obligations for closing 2016?

Exemption thresholds have increased

Medium size groups. From now on, medium size groups are exempt from consolidation, on condition that they are not composed by any public-interest entity (in French EIP).

To know: in France, EIP includes companies listed on a regulated market, credit institutions, as well as mutual funds and insurance companies.

New applicable thresholds, showed in the table below, reduce significantly the number of groups affected by the obligation to establish and publish consolidate accounts (C. com. art. L 233-17 and R 233-16 amended).

In practice: In order to calculate these thresholds, it’s suitable to add the figures resulting from individual accounts N-1 and N-2 of all the controlled companies forming group in N.

Calculation basis. New thresholds come into force at the end of the fiscal year 2016 being applicable to the 2014 and 2015 figures of the group entities existing in 31st December 2016.

Significant influence and consolidation requirement

Another innovation: As from January 1st 2016, companies that only have holdings over which they have a strong influence are no longer required to establish consolidated accounts. Only the controlled companies, exclusively or jointly, are taken into account (C. com. Article L 233-16 amended).

For the record: Significant influence on company’s management and financial policy is presumed when the firm has, directly or indirectly, at least the 20% of voting rights on this company (C. com. art. L 233-17-2 new).

For all that, the holdings on which a significant influence is exercised, remain within the consolidation perimeter of the groups that are subject to the obligation to establish and publish the consolidated accounts

The consequences of the obligation’s discharge

Current term. If you leave the field of obligation to consolidate, the external auditor’s mandate continues until his termination and the shareholders can’t legally terminate his term.

To create consolidated accounts voluntarily. It’s possible to continue presenting consolidated accounts in a voluntary way, when thresholds are not exceeded.

In this case, if there is publication, it’s suitable to comply with general rules for consolidated accounts creation and publication (C. com. art. L 233-16 and L 233-18 to 27).

To know: The National Company of External Auditors considers that there is not publication of consolidated accounts by the entity who establishes them voluntarily for its needs and is not required to certify it (CNCC, background note NI.I “Les rapports du commissaire aux comptes sur les comptes annuels et consolidés » February 2010).