Consolidated financial statements : purpose and scope of application

What are consolidated financial statements ?

Consolidation is an accounting practice that involves presenting the financial statements of a company that exercises control over one or more subsidiaries. The parent company and its subsidiaries together form a corporate group. It becomes both useful and strategic for management, shareholders, and other stakeholders to have access to aggregated financial data for the group, in order to analyze its activity and assess its performance. Group accounts consist of:

• Primary statements: Balance sheet, Income statement, Cash flow statement
• Supplementary statements : Additional tables and explanatory notes to the primary statements

These consolidated financial statements are, in principle, subject to certification by statutory auditors, who are responsible for verifying that they have been prepared regularly and accurately in accordance with applicable accounting standards.

When should consolidated financial statements be prepared ?

In France, the Commercial Code (Article L233-16) requires French parent companies to prepare consolidated financial statements when, for two consecutive financial years, two of the following three thresholds are exceeded:

• Total balance sheet : €30 million ;
• Turnover : €60 million ;
• Headcount : 250 employees.

These thresholds, applicable in France as of January 1, 2025, are assessed by aggregating the accounting data of the parent company and all entities over which it exercises exclusive or joint control, without eliminating any intra-group transactions.

Beyond this legal obligation, it is common for corporate groups that do not exceed these thresholds to still prepare consolidated financial statements. This may occur, for example:

• At the request of the group’s financiers (whether shareholders or not), as a guarantee of repayment capacity ;
• At the request of the group’s executive management, for better performance monitoring ;
• At the request of a third-party client or supplier, such as in response to a group tender process.

Consolidated financial statements are applicable only in France ?

No. Consolidated financial statements must be prepared in accordance with the regulations of the parent company’s country, which may vary from one jurisdiction to another. In some cases, consolidated financial statements must be prepared in accordance with international standards (IFRS). In France, for example, companies listed on a regulated market are required to prepare and publish their consolidated financial statements in accordance with international accounting standards.

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