Analysis of consolidated reporting in the international standard of financial reporting

Секція: МСФЗ-звітність: особливості аудиту і аналізу Коментарі (0)
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Authors: N.A.Scryaga, N.E. Lelyuk, O.L. Ilienko


It is demonstrated in the paper that the problem of increasing effectiveness and reliability of the results’ interpretation in consolidated reporting needs additional methods of analysis. To solve this problem a comparison analysis with a number of coefficients should be used.


Key words: consolidated reporting, International Standard оf Financial Reporting, analysis.



The problems of development and implementation of effective methods for preparing a consolidated financial report and favoring the development of socially oriented economy have become topical under the conditions of completely new requirements to computerization of the society.

Reporting consolidation is the process of correcting and aggregation of the financial information of individual financial reports of the mother company and subsidiaries, associated companies as well as joint ventures. The consolidated financial report gives information on the finances of the consolidated group of companies represented as one business entity. Consolidated balance should separately present the aggregated capital and reserves of minority interests at the beginning and at the end of the reporting period. This amount of money should be equivalent to the aggregated assets value with the exception of the value of the subsidiaries’ commitments, i.e. their part in the net assets of the consolidated group.

Consolidated financial report is made according to the International Standard of Financial Reporting (IAS), 27 “Consolidated and independent financial reporting” and International Standard of Financial Reporting (IFRS) 10 “Consolidated financial reporting”.

The following rules are used for working out reports for a group of companies:

  • Profits of all companies of the group should be summed up;
  • Assets and commitments of all companies of the group should be summed up;
  • Consolidated correcting is needed for working out a consolidated financial report;
  • The share of the shareholders without the right to control is represented in the capital of the consolidated company. It is the part of the undivided profit and reserves which does not belong to the shareholders of the mother company;
  • Interactions among the companies of the group are illuminated as well as the balance inside the group;
  • Consolidated report presents only the results of the operations with the third side, therefore a possibility increasing the financial result “on paper” Is excluded [2].

Consolidation is a substitution of the “initial value of investment” in the reporting of the mother company by the elements that the investments represent, i.e.

  • The share of the mother company in the net assets of the company on the date of reporting and the goodwill balance that appeared on the date of purchase;
  • The mother company’s share in the increase of the net assets of the subsidiary from the date of purchase should be also included into the undivided profit of the mother company that, therefore, is able to balance the assets and liabilities.

Certain methods of financial state analysis have been developed in the international practice, which are based on various absolute and relative indices that allow not only analyze the company’s balance articles but compare companies in one business or having similar activities. Such comparative analysis is done not only within the term of reporting but for a longer period, which reflects quite a long history of the company’s activities. The analysis allows tracing the trends for the company’s perspective development, which is very important for practical activities as companies make long-term, medium-term and short-term planning.

The main source of giving information for analysis is consolidated financial reporting of the group. Consolidated financial report presents more information for analysis than individual financial report of the mother company or a subsidiary.

The analysis of the consolidated financial reporting is exposing the interrelations and interdependence of various indices of the group activities that are included into the consolidated financial reporting.

The main method for such an analysis is getting a small number of key parameters that give an objective and exact view of the financial state, financial results and money flows of the mother company and its subsidiaries as one group.

The analysis of the publications of foreign scholars and the analysis of the published consolidated financial reports proves that similar to the report of an individual company the main directions for the analysis of the consolidated financial reporting are the following [1]:

  • Horizontal analysis;
  • Vertical (structural analysis;
  • Trends’ analysis;
  • Coefficients analysis.

The analysis of the consolidated financial reporting is done on the basis of the individual annual financial report. Thus, it should be noted that the same methods are used for consolidated report analysis as for individual annual financial report analysis. However, using the same coefficients cannot result in an efficient and exact analysis. Therefore, comparative analysis should be also used equally with the abovementioned directions of the consolidated financial report analysis.

Besides, the following coefficients can be suggested for consolidated report analysis: the share of the financial investments of the company in the group in the general amount of assets; the goodwill share; the share in the capital; one hryvna GW/ one hryvna net assets.


Список джерел

  1. 1. Голов С. Ф. Бухгалтерський облік та фінансова звітність за міжнародними стандартами: практичний посібник / С. Ф. Голов, В. М. Костюченко. –Х.: Фактор, 2007. – 976 с.
  2. 2. МСФЗ (IAS) 27 — “Консолідована та окрема фінансова звітність”–Режим доступу :
Автор:   @   17 Липень 2015 Коментарі (0)

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