



































Situatii Financiare Consolidate


 
 

AGORA INTERNATIONAL JOURNAL OF ECONOMICAL SCIENCES, 
AIJES, ISSN 2067-3310, E - ISSN 2067 – 7669, VOL 11 (2017) 

 

Consolidated Financial Statements - Elements of the Management Decision 

to Invest 
 

Cristina Ioana Antik
1
 

1
 Agora University of Oradea, Tineretului Square Str., No. 8, Oradea, Romania 

E-mail antikcristina@yahoo.com  

Abstract  

The objective of the consolidated financial statements is to present the financial position, performance and 

evolution of the financial position in relation to the units included in the group of companies, as if it were a 

single company. The subject of consolidation is the companies within the group, and the object of consolidation 

is their annual financial statements. Consolidation of financial statements is a technique of engineering financial 

accounting, which aims to produce information necessary for external users. It is also a management tool, as it 

allows to clarify the complex relations between subsidiaries and the parent company and to compare the results 

obtained with the set objectives. 

Keywords: consolidated, financial, statements, management, decision, investment.  

1 Introduction 

In the economic life of different countries there are both economic agents who carry out their 

activity as independent legal entities and groups of companies linked to each other from an 

economic and financial point of view, under the control or influence of one of them. Groups 

of societies are an increasingly important reality in the contemporary world. The group of 

companies represents the ensemble made up of two or more companies, each with its own 

legal personality, but which are subject to a unitary economic direction assumed by one or 

more of them. The companies within the group, having legal personality, each prepare 

consolidated financial statements according to the specific regulations established by each 

country. 

The information provided by the individual annual financial statements of the component 

companies of the group is insufficient and irrelevant, as they do not allow a correct 

assessment of the economic-financial situation of the group. The individual financial 

statements do not reflect the joint activity of the various group companies. 

The consolidated financial statements of the group are not equal to the sum of the annual 

financial statements of the group companies, as there may be internal transactions between the 

group companies. These operations artificially increase the values of individual accounts. The 

elimination of these operations is not limited to the simple addition of individual accounts. 

The need for consolidated financial statements is obvious, they give a more comprehensive 

picture of the real situation of a group, an image that can not give all the balance sheets of the 

component companies, they allow the global expression of the financial situation and the 

result of the group. The consolidated financial statements ensure the aggregation of assets, 

liabilities and equity, as well as income and expenses to provide a global and accurate picture 

of the group of companies. For a group of companies, whether operating at national, regional 

or global level, benefiting from the information provided through the consolidated financial 

statements is a real and solid basis for substantiating investment decisions, strategic decisions 

and, last but not least, executive management decisions. An investment decision based on 

mailto:antikcristina@yahoo.com


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viable, comparable, consolidated and real accounting information is subject to a high degree 

of success. 

2 The purpose and content of the consolidated financial statements 

In a modern accounting framework, the purpose of the consolidated financial statements is to 

provide a structured financial representation of the financial position and transactions of the 

group. Consolidated financial statements must provide information about the financial 

position, performance and cash flows of an enterprise, information that must be useful to a 

wide range of users in making their economic decisions [1]. 

To achieve this goal, the consolidated financial statements must provide information to enable 

users to make forecasts of future cash flows, in particular regarding their maturity and 

probability. 

In this regard, the information aims to: 

- Group-controlled assets, ie resources generating future cash flows;  

- Group debts, ie external liabilities that must be at the origin of payments;  

- Equity, as residual interest of the owners in the assets controlled by the group;  

- The result of the group and, in a broader sense, its economic performance, rendered by 

reflecting the evolution of equity, evolution from which are excluded the effects of operations 

performed directly with the owners;  

- Past cash flows, which can be the basis for determining future cash flows. 

This information must enable account users to specify the ability of the undertaking 

concerned to pay dividends, interest and, in general, to pay its debts on time. In accordance 

with IAS 1 Presentation of Financial Statements, a complete set of financial statements 

includes the following components: 

1. Balance sheet 

2. Income statement 

3. A situation showing:  

a. Either all changes in equity (all changes in equity);  

b. Either changes in equity, except for those arising from capital transactions with owners and 

distributions in their favor (changes in equity than those arising from capital transactions with 

owners and distributions to owners);  

c. Cash flow statement;  

d. Accounting policies and explanatory notes. 

According to OMFP 3055/2009, the consolidated financial statements include the 

consolidated balance sheet, the consolidated profit and loss account and the explanatory notes 

to the consolidated financial statements. These documents constitute a unitary whole [2]. 

The consolidated financial statements provide a true and fair view of the assets, liabilities, 

financial position and profit or loss of the companies included in these financial statements as 

a whole. 

Beyond these financial statements, companies are encouraged to provide critical management 

views, by describing and explaining the main features of financial performance and financial 

position, as well as the main uncertainties they face. 

Such a report must include: 

- the main factors and influences that determine performance, including the environmental 

changes in which the entity operates, its response to such changes and effects, its investment 

policy to maintain and increase the performance from which, distinctly, the dividend policy 

should be presented;  

- the sources of financing used by the entity, its borrowing rate policy and its risk 

management policies;  



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- the solidity of the entity and its resources, elements whose value expression is not reflected 

in the balance sheet, in accordance with the international accounting reference. 

2.1 The consolidated balance sheet 

In accordance with the international standard IAS 1, the structure and content of the balance 

sheet must distinguish between current and non-current items. 

When such a distinction is not made, assets and liabilities are, in principle, classified 

according to their liquidity and their exigibility. 

Regardless of the presentation, the group mentions, in the consolidated financial statements, 

the under-one-year portion of assets and liabilities for all items that are likely to contain both 

short-term and long-term items. 

Overall, this standard (IAS 1) refers to the items that must be disclosed in the balance sheet: 

property, plant and equipment; intangible assets; financial assets (excluding equity 

investments, customer and operating receivables, cash and cash equivalents; equity 

investments; inventories; customers and other operating receivables; cash and cash 

equivalents; suppliers and other operating liabilities; tax liabilities and assets, provisions, non-

current interest-bearing liabilities, minority interests, issued capital and reserves. 

 According to OMFP 1802/2014, the assets and liabilities of the entities included in the 

consolidation are fully incorporated in the consolidated balance sheet, by summing up similar 

elements [2]. 

2.1.1 Current and non-current assets 

Current balance sheet assets include: 

- Items intended to be made or held for sale or consumption within the normal operating cycle 

of the enterprise; or 

- Items intended mainly for trading on different markets; or 

- Items held in a short-term perspective, the entity (group) expecting to achieve them within a 

maximum of one year from the end of the year; or 

- Liquidity or liquidity equivalents, if their use is not restricted. 

The other assets are considered non-current items. They include both tangible and intangible 

assets, as well as long-term operating and financial assets. 

Current assets refer, in particular, to inventories and receivables, which are sold, consumed or 

realized in the normal operating cycle, even when they are not expected to be realized in the 

next 12 months after the end of the year. 

Both OMFP 3055/2009 for the approval of the Accounting Regulations compliant with 

European directives and Order 2239/2011 which were subsequently repealed by Order 

1802/2014 (the latter coming into force on January 2015) [2] show that stocks can be 

presented as a single item in the consolidated annual financial statements, if there are special 

circumstances that could lead to unjustified expenses. 

Securities traded on the markets are current assets, if they are expected to be realized in the 

next 12 months following the end of the year, otherwise they are considered non-current 

assets. 

Order 1802/2014 specifies that the book values of the shares in the capital of the entities 

included in the consolidation are offset by the proportion they represent in the capital and 

reserves of these entities, as follows: 

a) offsets are made on the basis of the book values of the identifiable assets and liabilities at 

the acquisition date of the shares or, if the acquisition takes place in two or more stages, at the 

date when the entity became a subsidiary. The acquisition date is the date on which control 

over the net assets or operations of the acquired entity is effectively transferred to the 

acquirer. 



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b) in the conditions in which the values provided in letter a) cannot be established, the 

compensation is made on the basis of the accounting values existing on the date when the 

entities concerned are included in the consolidation for the first time. 

The differences resulting from such offsets are presented as a separate item in the 

consolidated balance sheet, as follows: 

- the positive difference is presented under the item "Positive goodwill"; 

- the negative difference is presented in the item "Negative goodwill". 

These elements, the methods used and any significant changes from the previous financial 

year must be explained in the explanatory notes to the consolidated annual financial 

statements. The amount attributable to the shares in the subsidiaries included in the 

consolidation, held by persons other than the entities included in the consolidation, is 

presented separately in the consolidated balance sheet, under the item "Minority interests". 

Minority interests must be presented in the consolidated balance sheet in equity, separately 

from the parent company's equity. 

2.1.2 Current and non-current debts 

A debt is a current element of the external liability when it is to be repaid: 

- Either within the normal operating cycle; 

- Either at a maturity within the next 12 months following the end of the financial year. 

Some current liabilities, such as trade payables, those related to employee relations or other 

operating costs, are part of the working capital requirement used in the normal operating 

cycle. Such items, as in the case of assets, are classified in the current category, even if they 

must be repaid over a period of more than one year. 

There are also cases where some current debts are not repaid within the normal operating 

cycle, but must be settled within the next 12 months, following the year-end date. For 

example, the short-term part of medium- and long-term loans, dividends paid, taxes on 

benefits payable, other non-commercial creditors. 

Interest-bearing debts, which generate a long-term financing of working capital requirements, 

are non-current elements of debts, for their part due at a date of more than one year. An 

enterprise must classify its long-term interest-bearing liabilities as non-current liabilities, even 

if they must be settled within the next 12 months following the end of the financial year, if 

[3]: 

- these are debts that, at the time of their contracting, were long-term debts;  

- the entity in question intends to refinance these debts through a long-term debt;  

- this intention is confirmed by the existence of a refinancing or rescheduling contract, 

concluded before the financial statements were approved. 

An analysis of the consolidated balance sheet allows us to make the following assessments: 

- within the balance sheet items of assets, respectively equity and debts, the following items 

specific to the consolidated accounts are presented: goodwill (positive acquisition difference), 

equity investments, minority interests; 

- the consolidated equity consists of: the share capital of the parent company, the consolidated 

reserves (the reserves of the parent company to which is added its share of the reserves 

obtained by the consolidated companies after the acquisition of the securities) and the 

accumulated accumulated profits or losses ( the accumulated profits or losses of the parent 

company to which is added its share of the profits or losses accumulated by the consolidated 

companies after the acquisition of the securities); 

- the differences generated by the conversion of the accounts of the foreign subsidiaries based 

on the closing rate method must be included in the category of consolidated equity; 

- the balance sheet is presented after the distribution of the result. 



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2.2 The consolidated profit and loss account  

In accordance with IAS 1, the income statement must disclose at least the following items: 

income; financial expenses; the share in the result of the affiliated entities and of the joint 

ventures put in equivalence; the pre - tax gain or loss recognized on the sale of assets or the 

settlement of obligations relating to discontinued operations; income tax; gain or loss after 

tax, found on discontinued operations; the result of the exercise. 

Also, some items will be presented in the profit and loss account as profit or loss allocations. 

These are the profit or loss attributable to minority interests and the profit or loss attributable 

to the capital holders of the parent company. 

A group must present in its profit and loss account or in the explanatory notes a classification 

of expenses by nature or by function. However, IAS1 encourages entities to use such an 

analysis directly in the income statement. 

The analysis by function of expenses, called the sales cost method, requires the allocation of 

expenses on three functions, as part of the cost of sales, distribution or administration 

activities. This classification may be of more interest to the recipients of the accounts than the 

classification by nature, giving them more relevant information, but sometimes involves 

arbitrary choices in the distribution of expenditure. In its application, professional judgment 

has an important role. 

The analysis by nature is simpler than the analysis by function, because it does not require an 

allocation of expenses according to the nature of the different functions of the enterprise. 

2.3 The consolidated statement of changes in equity  

The statement of changes in consolidated equity explains the changes in consolidated equity 

from one year to the next. Consolidated equity may change due to:  

- Increasing the capital of the consolidating enterprise;  

- Distributions made by the consolidating enterprise during the year;  

- The incidence of the exchange rate variation, in case of consolidation of foreign enterprises;  

- Incidence of revaluations;  

- The incidence of restructurings and certain internal disposals of assets;  

- Changes in the percentage of interest in consolidated enterprises, following the change of its 

capital;  

- Changes in accounting methods. 

 

2.4 Incidences of the conversion of foreign companies’ accounts on equity 
In order to consolidate foreign companies, their financial statements may be converted based 

on the use of the historical cost method or the closing rate method. The use of the historical 

exchange rate method does not cause a change in equity, because they are converted based on 

historical cost and the incidence of exchange rate changes is recorded in the income 

statement. 

In the case of the closing exchange rate method, equity is also converted on the basis of the 

historical exchange rate. But, due to the conversion of the other balance sheet items based on 

the closing rate, in the balance sheet of the foreign company is presented the balance sheet 

item of capital “Conversion differences”. When the securities of the consolidated company 

are eliminated, the translation differences are divided between the group and the minority. In 

this situation, the conversion difference that belongs to the group changes from one year to 

another depending on the evolution of the exchange rate. 

 



6 
 

2.5 Consolidated cash flow statement 
The cash flow statement is an essential component of the financial statements presented by 

large enterprises. The format of the cash flow statement in the international accounting 

framework is based on the IAS 7 standard “Cash flow statement”. 

The current success of the cash flow statement is closely linked to the development of the 

valuation of economic activities through financial markets. As it provides investors with 

useful information for making decisions, the picture of cash flows contributes to the 

efficiency of markets. Also, the success of value-based management can only increase the 

importance of the cash flow statement. 

The table of cash flows shows such flows, known as receipts and payments, during the period. 

In other words, it shows where the liquidity came from and how it was spent, thus explaining 

the causes of their variation. 

In the vision of the accounting norm IAS 7 “Statement of cash flows”, cash is assimilated 

with cash and cash equivalents. Liquidity includes cash and demand deposits. Liquidity 

equivalents are short-term investments that are highly liquid, easily convertible into a 

predetermined amount of liquidity and whose value is not likely to change significantly. 

The purpose of holding cash equivalents is to meet short-term treasury commitments. It 

follows that their maturity is usually less than 3 months. The securities representing the 

participations are excluded from the cash equivalents, except for the preferred shares acquired 

shortly before their maturity and which have a fixed redemption date. The expression cash 

flows refers to the set of cash inflows and outflows and cash equivalents. Cash flows do not 

include movements between items that constitute liquidity or cash equivalents, because they 

are part of the management of the company's treasury. The statement of cash flows must show 

the cash flows for the year, broken down into operating, investing and financing activities. 

2.5.1 Cash flows generated by operating activity 

These refer to: 

- Proceeds from the sale of goods and services; 

- Receipts from royalties, fees, commissions and other income;  

- Payments on debts to suppliers of goods and services;  

- Payments in favor of employees;  

- Payments and refunds of income taxes, provided that they cannot be specifically associated 

with financing and investment activities, etc. 

2.5.2 Cash flows generated by investment activity 

These refer to:  

- Payments made for the acquisition of tangible and intangible assets, as well as other long-

term assets;  

- Proceeds from the sale of tangible and intangible assets and other long-term assets;  

- Payments made for the acquisition of equity securities and debt securities issued by or from 

other undertakings, as well as payments made for the acquisition of securities in joint 

ventures; - Receipts relating to the sale of equity securities and debt securities issued by or 

from other undertakings, as well as receipts relating to the sale of securities held in joint 

ventures;  

- Cash advances and loans to third parties;  

- Receipts from the repayment of cash advances and loans to third parties. 

2.5.3 Cash flows generated by financing activity 

These refer to: 

- Receipts from the issue of shares and other equity instruments; 

- Payments made to shareholders for the acquisition or redemption of the company's shares; 



7 
 

- Proceeds from the issuance of bonds, bank loans, treasury bills, mortgages and other short-

term or long-term loans; 

- Liquidity repayment of borrowed amounts; 

- Payments made by the lessee to reduce the debt balance related to a lease-financing contract. 

3 Conclusions  

The need for consolidated financial statements is obvious, they give a more comprehensive 

picture of the real situation of a group, an image that can not give all the balance sheets of the 

component companies, they allow the global expression of the financial situation and the 

result of the group. The main factor in generating this need is presented by the existence on 

foreign capital markets of multinational companies and groups. In order to be able to manifest 

themselves as actors of the international capital markets, the groups of companies must first 

of all have comparable information, but also sufficient, or relevant, regarding the existing 

investment opportunities. 

The existence of consolidated information at the level of a group of companies, especially in 

the conditions in which it operates beyond the borders of the national economy, represents a 

mandatory condition for the success and economic performance of the group [4]. The 

objective of the consolidated financial statements is to present the financial position, 

performance and evolution of the financial position in relation to the units included in the 

group of companies, as if it were a single company. The existence of consolidated financial 

statements at the level of the group of companies has quickly covered the distance between 

necessity and reality, due to the needs manifested by economic reality, but also due to 

significant efforts to increase the competitive advantages of different economic entities [5]. 

Within any company, but especially within a group of companies, the foundation of 

managerial decisions and, in particular, of investment decisions on real economic and 

financial bases has become a necessity, as a result of the risks that may arise and cause a 

failure of actions taken, but also due to the significant costs involved in adopting and 

implementing an inappropriate decision. 

Benefiting from the information provided through the consolidated financial statements is a 

real and solid basis for substantiating investment decisions, strategic decisions and, last but 

not least, executive management decisions. An investment decision based on viable, 

comparable, consolidated and real accounting information is subject to a high degree of 

success. 

Consolidation of accounts is an important condition for rendering a true and fair view of the 

balance sheet, performance and financial position of an enterprise in accordance with the 

normative framework of International Accounting Standards. The harmonization of the 

accounting regulations in our country with the international ones will bring to the forefront 

this issue, in the not too distant future. Consolidation of accounts, especially using a 

regulatory framework, leads to clarification of the financial position and performance of a 

group of enterprises. It is thus eliminated that the public is misled by multiplying turnover as 

a result of reciprocal transactions, or by confining all risks and indebtedness to a single 

enterprise in the group for a more favorable presentation of the others. 

REFERENCES 

[1] Dorina Nicoleta Lezeu, Analiza situațiilor financiare ale întreprinderii, Editura Economică, 2004; 

[2] OMFP 3055/2009 pentru aprobarea Reglementarilor contabile conforme cu directivele europene 

modificat prin  Ordinul 2239/2011  și care ulterilor au au fost abrogate de Ordinul 1802/2014 (acesta din 

urmă întrând în vigoare începând cu luna ianuarie 2015) 

https://contabilul.manager.ro/a/14125/noi-reglementari-contabile-de-la-1-ianuarie-2015-s-a-publicat-ordinul-18022014.html
https://contabilul.manager.ro/a/14125/noi-reglementari-contabile-de-la-1-ianuarie-2015-s-a-publicat-ordinul-18022014.html


8 
 

[3] L.Eros-Stark, M.Pantea, Analiza situației financiare a firmei. Elemente de teorie, studiu de caz, Editura 

Economică, București, 2001 

[4] https://www.academia.edu/31080775/CAPITOLUL_I_ASPECTE_GENERALE_PRIVIND_GRUPURIL

E_DE_SOCIET%C4%82I_%C5%9EI_SITUAIILE_FINANCIARE_CONSOLIDATE_1._NOIUNEA_D

E_GRUP_DE_SOCIET%C4%82I 

[5] https://lege5.ro/Gratuit/gqytambrgm/situatii-financiare-anuale-consolidate-si-rapoarte-consolidate-

reglementare?dp=gy4tanjyha4ti  

 

https://www.academia.edu/31080775/CAPITOLUL_I_ASPECTE_GENERALE_PRIVIND_GRUPURILE_DE_SOCIET%C4%82I_%C5%9EI_SITUAIILE_FINANCIARE_CONSOLIDATE_1._NOIUNEA_DE_GRUP_DE_SOCIET%C4%82I
https://www.academia.edu/31080775/CAPITOLUL_I_ASPECTE_GENERALE_PRIVIND_GRUPURILE_DE_SOCIET%C4%82I_%C5%9EI_SITUAIILE_FINANCIARE_CONSOLIDATE_1._NOIUNEA_DE_GRUP_DE_SOCIET%C4%82I
https://www.academia.edu/31080775/CAPITOLUL_I_ASPECTE_GENERALE_PRIVIND_GRUPURILE_DE_SOCIET%C4%82I_%C5%9EI_SITUAIILE_FINANCIARE_CONSOLIDATE_1._NOIUNEA_DE_GRUP_DE_SOCIET%C4%82I
https://lege5.ro/Gratuit/gqytambrgm/situatii-financiare-anuale-consolidate-si-rapoarte-consolidate-reglementare?dp=gy4tanjyha4ti
https://lege5.ro/Gratuit/gqytambrgm/situatii-financiare-anuale-consolidate-si-rapoarte-consolidate-reglementare?dp=gy4tanjyha4ti

