ABSTRACT
This chapter argues that the accounting practices used, through time, where one company purchases enough shares to obtain effective control over another company. It contains an incontrovertible evidence of the determination and ability of management to pursue reporting strategies designed to mislead rather than enlighten users of corporate financial statements. The investment was recorded in the holding company's balance sheet at cost and profits were reflected in the holding company's profit and loss account only when a dividend transfer had been proposed or made. Financial reporting requirements at the beginning of the twentieth century focused on companies as separate legal entities. CA 1900 obliged company directors to present an audited balance sheet to shareholders attending the AGM, while CA 1907 required public companies to file an audited balance sheet with the Registrar of Companies. The chapter examines the history of off-balance sheet finance.
