Consolidated Financial Statements


The Consolidated Financial Statements are the financial statements grouping of the controlling entity (parent company) with the separate financial statements of the subsidiaries to be presented as a single economic entity.

Main Terms for Evaluating the Consolidated Financial Statements Elaboration


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.

Power of Attorney

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).


They are entities controlled by another one.

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

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”.

Is it possible that a Parent Company does not consolidate its Financial Statements with one or more other entities?

Under IFRS 10, a controlling entity need not consolidate its consolidated financial statements if it meets all the following conditions:

  • The parent company has informed, without objection, the subsidiaries and other owners (non-voting) will not file Consolidated Financial Statements.
  • Its debt or equity instruments are not traded in a public market, whether on a local or foreign stock exchange.
  • It does not file its financial statements with a regulatory organization, nor in the process.
  • Its ultimate parent company prepares consolidated financial statements.

Considerations in the Consolidated Financial Statements elaboration

  • The consolidated financial statements must have the same accounting framework.
  • The controlling entity shall present non-controlling participations in the consolidated statement of financial position, within equity, separately from the owners’ equity of the controlling entity.
  • Similar portions of assets, liabilities, equity, income, and expenses are combined.
  • The amount of the parent’s investment in each subsidiary and the former’s share in the equity of each subsidiary are offset (eliminated).
  • Assets, liabilities, equity, income, expenses, and intragroup cash flows related to transactions among group entities are eliminated in their entirety.

What is the advantage of preparing and filing 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.

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