Five Answers to Basic Questions Concerning Consolidation
1) What are consolidated financial statements?
These are financial statements combining the situation concerning the assets and liabilities and the corresponding profit or loss for all group members as if they formed a single company.
2) Who is obliged to consolidate?
Consolidated financial statements must be issued by groups of companies that comply with two of the following three criteria
- Sum of consolidated assets exceeding CZK 100 million
- Total consolidated turnover exceeding CZK 200 million
- Consolidated number of employees higher than 50
Exceptions from this obligation include, for example, groups of companies in the Czech Republic that are at the same time members of a higher consolidation unit within the EU. If this is the case, it is not necessary to consolidate separately in the Czech Republic.
3) What we should not forget?
Consolidated financial statements require a large amount of information, some of which are difficult to obtain. This especially includes the volume of the mutually provided services, re-sale of assets and stocks, and the mark-up from these transactions. It is ideal to plan consolidation at least a year in advance. It is especially necessary to unify the accounting methods in individual group members in order to obtain data for consolidation.
4) Do you know that
you can decide whether you will compile your consolidated financial statements in accordance with IFRS or Czech legislation?
5) What are the technicalities around consolidation?
Consolidation can be done using specialized software or using just an MS Excel table. However, the initial setup is quite complex, and we therefore recommend that you contact an expert for the first steps. After this you will be able to run consolidation on your own, as long as the group structure and the mutual relationships do not change much.