📈 Understanding Financial Consolidation

Financial consolidation involves merging the accounts of several legal entities within the same group to obtain a unified financial overview. It helps produce consolidated financial statements as if the group were a single company.

It mainly applies to groups with subsidiaries, parent companies, or sub-holdings. The aim is to eliminate intra-group transactions (sales, dividends, cross-debts...) and avoid double-counting.

Consolidation follows specific accounting standards like French rules (CRC 99-02) or IFRS (especially for listed companies). Steps include restating individual accounts, eliminating intra-group flows, and integrating subsidiaries based on control level.

In short, it's essential to give investors, stakeholders, and executives a true and fair view of the group's financial health.

💡 Why is Consolidation Essential?

📢 Clear Financial Communication

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Consolidation ensures transparent communication with investors, partners 📊, and regulators. It provides a cohesive overview of the entire group.

This is crucial for complex organizations with multiple subsidiaries. It prevents redundancy, misinterpretation, and enhances financial credibility.

📌 Under Regulation (EC) No 1606/2002, listed companies in the EU must present consolidated accounts using IFRS.

A clear and compliant consolidation improves the group’s image 🏢 and eases access to financing.

📊 Strategic Analysis Tool

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By consolidating entities, executives gain a comprehensive strategic view of the group. This reveals profitability, risk, or debt levels and helps to steer performance 🚀.

It supports budgeting, investment planning, and business decisions in large, diversified groups.

📈 Consolidation allows tracking of synergies, margins, and cash flows 🔄. A powerful management lever.

💼 In uncertain times, consolidated reporting helps financial teams respond rapidly.

⚖️ Legal Compliance

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Consolidation is a legal obligation for groups exceeding thresholds 📋. In France, Article L.233-16 of the Commercial Code requires consolidated accounts from parent companies controlling others.

It's also required for listed firms and specific sectors like banking or insurance 🏛️.

Failing to comply leads to financial penalties, auditor refusals, or blocked funding 💸.

✅ Consolidation secures legal compliance and institutional trust.

🔍 Realistic Financial Picture

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Consolidation removes intra-group transactions (sales, loans, dividends...), giving a more faithful and usable financial view 📑.

It avoids duplication and enables clear analysis of actual flows – key for bankers, investors, and analysts.

It also supports benchmarking, valuation, and decisions on restructuring or mergers 🔧.

Proper consolidation helps prevent artificial schemes during tax audits 🔒.

How Does It Work?

1. Scope Definition 📌

We define which entities fall within the consolidation scope using legal and economic criteria.

This includes analyzing control links, significant influence, or global integration.

2. Collecting Financial Statements 📄

We gather subsidiary accounts, often in local standards.

We then ensure harmonization (periods, currencies, standards).

3. Adjustment Treatments 🔧

We neutralize intra-group flows: reciprocal accounts, internal margins, intra-group dividends, etc.

Adjustments are done under IFRS or French GAAP.

4. Consolidation & Aggregation 📊

We proceed with aggregation, currency conversion, and minority interests computation.

5. Reporting & Delivery ✅

We deliver consolidated financial statements and group dashboards, ready for auditors, management, or investors.

Our Consolidation Services 👥

  • 🌍
    IFRS & US GAAP Conversion: We help international groups convert statements under IFRS (mandatory in the EU per EC Regulation 1606/2002) or US GAAP. This includes restating assets, liabilities, leases, etc.
  • 📚
    Consolidated Accounts: We produce consolidated accounts (full, proportional, or equity method) with proper eliminations, cross-holdings, and regulatory presentation.
  • 🧰
    Consolidation Software: We assist in selecting and implementing tools (e.g., Amelkis, Sigma). We offer training and ensure IFRS/French GAAP compliance.
  • 📊
    Group Reporting: We set up standardized reporting flows to ensure timely, secure, and harmonized group reporting.

Our tips for effective consolidation 🧠

  • 🔍
    1. Define a clear consolidation scope: First and foremost, identify exactly which entities are included in the consolidation scope 🧾. The scope must strictly follow the control or significant-influence criteria (IFRS 10 or IAS 28) to avoid omissions or unjustified inclusions. A poorly defined scope can lead to costly restatements 💸 or sanctionable errors during a legal review.
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    2. Harmonise closing dates and deadlines: Ideally, all group entities should close on the same date 📅. If not feasible, timing adjustments are required (per IFRS 1.9). Also set up a shared consolidation calendar to ensure consistency, timeliness, and reliability of submitted data ✅.
  • 💻
    3. Standardise charts of accounts: To reduce input or interpretation errors, each subsidiary should use a group chart of accounts or a reliable mapping table 🧾. This enables a homogeneous package submission, supports automation (e.g., Amelkis, Sigma…), and aligns practices with French GAAP or IFRS.
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    4. Anticipate complex adjustments: Some transactions require special attention (💼 cross-holdings, 📑 lease contracts, 💰 financial instruments). Identify, document and validate these in advance to comply with current rules (notably IFRS 16 for leases).