Consolidated financial statements are the grouping of the financial statements of the controlling entity (parent) with the separate financial statements of the subsidiaries, in order to be presented as if they were a single economic entity.

Main terms for evaluating the preparation of consolidated financial statements


According to IFRS 10 “Consolidated Financial Statements”, an entity controls when it has power over other entities, is entitled to variable returns and has the ability to influence returns through its power over those entities.

Power of attorney

An entity (parent) has power over one or more entities when it has rights that give it the present ability to conduct relevant activities, i.e., activities that significantly affect the performance of one or more entities (subsidiaries).


An entity that is controlled by another entity.

When should an entity consolidate its financial statements with the entities it controls?

If an entity prepares its financial statements in compliance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB), has control and power over one or more entities, it is required to consolidate the financial statements in compliance with International Financial Reporting Standard No. 10 “Consolidated Financial Statements”.

Is it possible that a controlling company does not consolidate its financial statements with one or more entities?

According to IFRS 10, a parent need not consolidate consolidated financial statements if all of the following conditions are met:

  • The parent company has informed, without objection, the subsidiaries and other owners (without voting rights) that it will not present consolidated financial statements.
  • Its debt or equity instruments are not traded in a public market, either in a local or foreign stock exchange.
  • It does not file its financial statements, nor is it in the process of doing so, with a regulatory organization.
  • Its ultimate parent company prepares consolidated financial statements.

Considerations in the preparation of consolidated financial statements

  • The financial statements to be consolidated should have the same accounting framework.
  • The parent company shall present non-controlling interests in the consolidated statement of financial position, within equity, separately from the equity of the owners of the parent company.
  • Similar parts of assets, liabilities, equity, income and expenses are combined.
  • The amount of the parent company’s investment in each subsidiary and the parent company’s share in the equity of each subsidiary are offset (eliminated).
  • Assets, liabilities, equity, income and expenses and intragroup cash flows related to transactions between group entities are eliminated in full.

What is the advantage of preparing and presenting consolidated financial statements?

When an entity that is a controller (parent) complies with all IFRSs and consolidates its financial statements with one or more entities in which it maintains control and power, it will allow, in a single set of financial statements, to inform owners and other users of the economic situation and performance of the Group.

Likewise, having consolidated financial statements will help the Group to be able to participate in tenders with private and state entities. Likewise, it will help to obtain new financing with banking entities.

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