Updated on 06.02.2024
Consolidated financial statements are financial statements of a group of companies, compiled and presented as financial statements of a single company.
A group of companies is not obliged to prepare consolidated financial statements, if the total indicators of the annual financial statements of the group of companies, for two consecutive financial years, including the reporting financial year, do not exceed two of the following criteria:
1. Net sales revenue during the reporting financial year – EUR 9,600,000;
2. The total value of assets indicated in the balance sheet – EUR 6,000,000;
3. The average annual number of employees during the reporting financial year is 50.
Financial statements of a subsidiary may not be consolidated if at least one of the following conditions is met:
1. Shares of a subsidiary company are acquired with the intention of selling them within one year from the date of acquisition;
2. Subsidiary’s activities are subject to significant long-term restrictions that limit its ability to transfer assets and funds to the parent company and exercise management;
3. The information required for the preparation of consolidated financial statements cannot be provided without extremely high costs and waste.
The financial statements of a subsidiary company may not be consolidated if that company is insignificant from the point of view of the company group, i.e. its assets at the end of the financial year do not exceed 5 percent of the parent company’s assets, and its net sales revenue during the reporting year does not exceed 5 percent of the parent company’s net sales revenue during the same period. This provision does not apply if there are several subsidiaries in the group of companies and if their financial statements are not consolidated, the principle of materiality and the requirement to correctly show the financial status of the group of companies would be violated.
A parent company that only has subsidiaries that are individually and collectively insignificant may not prepare consolidated financial statements.
Legislation
1. Law on Consolidated Financial Reporting of Enterprise Groups
2. 16th Business Accounting Standard “Consolidated Financial Statements and Investments in Subsidiaries”
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