Consolidated financial statements

Back in the late 19th century, the United States began to compile consolidated statements. The first annual report contained information exclusively about the parent company, and the second one was already consolidated. Let's figure out what this concept is.

What is consolidated reporting?

In the Federal Law, this term means systematic information that allows you to accurately reflect the financial position of the company, the results of operations, as well as the change in the financial position of the company or groups of organizations, which is defined in accordance with IFRS. A group of companies is a set of several organizations, where one exercises control over all the others. This can be deciphered. Control lies in the ability to determine for another company its economic and financial policies in order to obtain economic benefits from its activities.

Control includes the following basic principles:

- Ownership of a majority of shares with voting rights ;

- control over the majority of voting shares;

- the right to determine the composition of the board of directors.

Since the consolidated reporting is submitted by the main company, its submission is mandatory only if the organization was established in accordance with the legislation adopted in Russia. There are certain companies for which this type is mandatory.

The federal law distinguishes three categories of organizations that are required to issue consolidated statements:

- Insurance companies;

- credit companies;

- organizations in which securities participate in circulation at trading exchanges or other organizers of trading on the securities market.

In Russia, the most popular stock exchanges are the MICEX and RTS. In total, 11 stock exchanges operate on the territory of Russia , but most of them play an insignificant role in the stock market. There is also a mass of foreign stock exchanges. All companies, whose shares are listed in the western stock exchanges, use IFRSs as necessary. Consolidated statements are familiar to credit organizations, so they are required to file all the documentation in this form.

Reporting requirements

Consolidated reporting is a set of documents drawn up in accordance with the requirements prescribed in IFRS. At the moment, this system includes such a set of components:

- 32 IAS standards;

- 8 IFRS standards;

- 28 explanations of the standards.

Reporting users

Previously, consolidation of reporting from Russian companies was required solely for foreign investors and creditors, and now the situation has become completely different. Now it is necessary to compile reports in this form. First of all, its users are shareholders and participants, but since it can be unnecessary for participants, it is provided for the provision of such reporting to the main controlling organizations. For credit institutions, such a body is the Central Bank, and for others in its capacity is the authorized body. In addition, that the reporting should be provided to the controlling bodies, the companies are obliged to publish consolidated accounts for the free familiarization with it of all comers. This is done through its placement in public systems or through publication in the media, which will ensure its accessibility for all.

Provision of consolidated statements should be made annually. Annual reporting is provided before the general meeting of the organization's participants is held, but not later than 120 days after the year for which it is compiled is completed.