According to IFRS (International Financial Reporting Stantards) 10, the “Consolidated Financial Statements”, an entity controls when it has power over other entities, has rights to variable returns, and the ability to influence in returns through its power over them.
An entity (parent) has power over one or more entities when it has rights that give it the current ability to direct the relevant activities, i.e., the activities that significantly affect the returns of one or more entities (subsidiaries).
If an entity prepares its financial statements in compliance with IFRS, issued by the International Accounting Standards Board (IASB), and has control and power over one or more entities, requiring consolidating the financial statements in compliance with IFRS N°. 10 “Consolidated Financial Statements”.
The controlling (parent) entity that meets all the IFRS requirements and consolidates its financial statements with one or more entities maintaining the control and the power over these, will also inform owners and other users in a single set of financial statements, the Group’s economic situation and performance.
Likewise, having consolidated financial statements will enable the Group to participate in bidding processes with private and state entities. It will also help the Group to obtain new financing from bank entities.