The principle that consolidated financial statements should report a parent and its subsidiaries as if they were a single economic entity has its origins in the notion of control. For the last two decades the principle of control and influence have been embedded into UK financial reporting standards and have been used to identify the method of accounting required for substantial business ownership relationships. To a considerable extent the same considerations have applied to the international accounting and financial reporting standards (IAS and IFRS). The IASB is working on a consolidation project with the objective of publishing a single set of control criteria for all entities and a single IFRS on consolidation. Required: a) Briefly outline the current definitions of control set out in chapter 2 of the ASB statement of principles for financial reporting and within existing international accounting standards relating to substantial business relationships. Explain the inadequacies and omissions within these definitions. b) Drawing upon IASB published documents about the consolidation project discuss the importance of a control based principle to determine whether a business relationship is reported on or off an entity’s balance sheet and articulate the dangers of a too wide definition of control. Incorporate considerations on the issues that IASB have tentatively concluded will determine control. The significant business relationships in your answer should include, but do not have to be limited to: subsidiaries, associates, joint ventures, special purpose entities and structured investment vehicles. Your answers should draw on chapter 2 accounting standards board (1999), statement of principles for financial reporting, ASB, existing IFRS and IAS, the IASB website project updates pages and your own wider reading from accounting journals. No referencing required. Exam essay question worth 20 Marks. No need to give opinions.