Consolidation plays a key role in the financial management of a group of companies. It consists in grouping and synthesizing accounting information to provide a true and fair view of the group’s assets, financial position and performance, as if it were a single entity.
Depending on the framework applied (LuxGAAP, IFRS, etc.), this process is both rigorous and technical, requiring time, resources and specialized expertise to ensure the reliability and conformity of consolidated data.
Benefits of consolidation
Consolidation offers several key advantages for your group’s management and strategy:
- A global strategic vision: far more than a simple obligation, consolidation is a powerful tool that provides a true and accurate overview of the group’s assets, financial position and performance. It facilitates optimized management and informed strategic decision-making.
- A regulatory requirement: If your group exceeds certain legal thresholds, Luxembourg law requires the preparation of consolidated financial statements.
- A guarantee of contractual transparency: In the context of commitments to third parties (investors, banks, insurance companies, suppliers, etc.), consolidated accounts may be required to reinforce trust and guarantee transparency.
- Improved internal processes: By establishing a structured framework, consolidation reduces the risk of errors and ensures greater reliability of financial information at every level.
Consolidation methods
Consolidation is based on three methods, chosen according to the level of control exercised over the entities concerned.
Full consolidation, which applies to subsidiaries with more than 50% control. Proportional consolidation, which applies to joint ventures under shared control, by consolidating their financial items in proportion to the rights held.
Lastly, the equity method is used for associates where control is between 20% and 50%.
ParFi Group to help you consolidate
Thanks to our expertise and our perfect command of LuxGAAP and IFRS, we can offer you tailor-made support to ensure smooth, rapid and perfectly compliant consolidation. We guarantee clear, comprehensive and efficiently delivered documents, while adapting to your specific needs and objectives. Put your trust in our expertise and gain peace of mind in your group’s financial management. Contact us today to find out how we can optimize your consolidation!
