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Consolidation of financial statements

Consolidated financial statements represent financial statements of a group, which consists of several separate legal entities: a parent company and one or more subsidiaries. The purpose is to present financial position and operating results of companies within a group as they were a single company.

The obligation of consolidation is regulated by the Accounting Act, while details of implementation and consolidation rules are written in CFRS 2 - Consolidated Financial Statements for small and medium-sized entities and in IFRS 10 - Consolidated Financial Statements for large entities.

Small and medium-sized entrepreneurs are required to consolidate the financial statements according to Accounting Act and IFRS 2 when they represent the parent company that has the obligation to consolidate financial statements. According to CFRS, the parent company is a company that controls one or more subsidiaries. Large entrepreneurs are required to consolidate the financial statements according to Accounting Act or IFRS 10 when they represent a parent company that has control over one or more subsidiaries.

In determining the obligation of consolidation of the financial statements, it should be careful about prescribed exceptions. According to the Accounting Act, the parent company doesn’t have to prepare consolidated financial statements for small groups unless those small groups include entities of public interest. Further, if the group consist only parent company and subsidiaries that are not individually or collectively significant for the consolidated financial statements, the parent company has no obligation to prepare consolidated financial statements, with the condition that it doesn’t include entities of public interest. Exceptions from consolidation are more detailed prescribed by the directive of Article 25 of the Accounting Act, or directives of CFRS 2 and IFRS 10.

The deadline for submitting the consolidated financial statements for 2016 is 30th September of the current year.

Under obligation of auditing are consolidated financial statements of large and medium-sized groups and consolidated financial statements of small groups which include entities of public interest.

Under obligation of auditing are consolidated financial statements of joint stock companies, limited partnership and limited liability companies whose consolidated data for the previous year exceed two of the three criteria:

  • Assets of HRK 15,000,000.00
  • Revenues of HRK 30.000.000,00 or
  • Average number of employees during the business year 25.

Under obligation of auditing are also annual consolidated financial statements of parent company which has submitted a request for the incorporation of its securities into a regulated market.

If you need to prepare consolidated financial statements or need to audit the consolidated financial statements, please contact our consolidation experts and certified auditors at revizija@uhy.hr.

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