Companies’ consolidated accounts

Registered with the Ordre des Experts-Comptables in Luxembourg (OEC) as well as in France (CNOEC), our experts and specialists at CELIANCE supports you, thanks to a multidisciplinary and competent team. We can guide you step by step through the whole consolidation process:

  • Analysis of the consolidation context and the group’s needs ;
  • Definition of the applicable perimeter: standard and applicable method according to the type of control identified;
  • Support in the processing and monitoring of accounting data;
  • Preparation and establishment of the consolidated balance sheet
  • Audit

What is consolidation ?

As part of its growth, the company must adopt an accounting methodology adapted to the size of its activity and its stakes. Consolidation allows the conglomerate of entities concerned by a group growth to be brought together by a global evaluation method aimed at obtaining a complete overview of its financial and economic health. It thus makes it possible to present a true picture of the group’s overall results.


What is the legislative framework ?

The principle of consolidated accounts in France refers to the obligation for companies to prepare consolidated financial statements that reflect the financial results of a group of companies. In France, this principle is governed by the French Commercial Code and the accounting regulations of the French Commercial Code.

A consolidated financial statement is a report that combines the financial statements of a parent company and its subsidiaries. The purpose of consolidated financial statements is to provide an overall view of the financial performance of the group as a whole, rather than of individual companies.

Under the principle of consolidated accounts in France, a parent company must prepare consolidated financial statements if it has a controlling interest in one or more subsidiaries. A controlling interest is defined as the power to govern the financial and operating policies of a subsidiary, generally through the ownership of a majority of the voting rights.

Consolidated financial statements must be prepared in accordance with generally accepted accounting principles and must include the balance sheet, income statement, cash flow statement and notes to the financial statements. The statements must reflect the financial performance of the group as a whole and give a true and fair view of the financial position and performance of the group.

In France, the requirement to prepare consolidated financial statements applies to public companies as well as to large private companies. Smaller private companies may be exempted from this requirement, but must still prepare individual financial statements in accordance with applicable law.

It is important to note that the principle of consolidated accounts in France is subject to regular review and updating, and companies should keep abreast of any changes in regulations and requirements. The legal provisions and application criteria for consolidation are listed in the Regulation n°2020-01 of October 9, 2020 relating to consolidated accounts for France and in the French Commercial Code (Section 3: Consolidated accounts – Articles L-233-16 to L233-28)

These provisions stem from Directive 2013/34/EU of the European Parliament and of the Council of June 26, 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of companies, amending Directive 2006/43/EC, repealing Council Directives 78/660/EEC and 83/349/EEC.
In practical terms, this accounting method is part of the desire to perpetuate the main accounting principles by transposing them to the scale of a group of companies. As a reminder, the principles are as follows:

  • The continuity of activities ;
  • Prudence ;
  • Consistency of accounting methods ;
  • Comparability of information

Which standards and methods ?

Consolidation requires the application of specific standards and methods.

Applicable accounting standards:

  • “FRENCHGAAP” (French standard)
  • “IFRS” (International Standard)


Applicable consolidation method :

  • Full consolidation
  • Proportional consolidation
  • Equity method

To what extent should consolidation be considered?
Consolidation is carried out as an internal requirement or to meet the requirements of Regulation No. 2020-01 of October 9, 2020 on consolidated accounts for France and in the French Commercial Code (Section 3: Consolidated accounts – Articles L-233-16 to L233-28).

In order to determine whether consolidation is necessary, it is necessary to look at the ownership and control of an entity, i.e., by analyzing the composition of the shareholder base, the identification of the power to remove or appoint members of the administrative, management or supervisory committee of an entity, the shareholder or sole shareholder controls the majority of the shareholder base in accordance with the legal provisions

  • Sole control: control by voting rights (direct or indirect) of more than 50% in an entity; (Full consolidation method)
  • Shared control: control resulting from voting rights (direct or indirect) shared equally between the shareholders; (proportional integration method)
  • “De facto” control: through political, financial or operational influence without holding a majority of voting rights (direct or indirect) equal to or less than 20%; (equity method)

Insofar as the consolidation work constitutes an additional workload, the legislator has established a reduction in the scope of eligibility in order to relieve small groups of companies of their consolidation obligation. 3 main criteria are to be retained:

Criterion 1:

The realization of the consolidation of accounts can be exempted if by derogation of Article L233-16 of the Commercial Code if on the basis of the last annual accounts, at least two of the three following criteria are not exceeded (Article R233-16):

  • Balance sheet total >24 million euros;
  • Net sales: >48 million euros;
  • Number of staff employed full time and on average during the financial year: 250.

However, for the assessment of these 3 criteria, it is necessary to have consolidated group data. In order to avoid any unnecessary consolidation for the group, a threshold has been set at which the group can recognize by simple addition of the data of the companies composing the group

Criterion 2:

The company at the head of the group (parent company) is at the same time the daughter of another company already subject to consolidation: since the company is already subject to consolidation, it is necessary to consider the choice of any minority shareholders of the company regarding the choice to be exempted from consolidation. In the case of exemption, the legal appendix of the company must include the exemption mention as well as all the information of the parent company that has consolidated its accounts.

Criterion 3:

The company only has subsidiaries that are of negligible interest individually and collectively: the consolidated assets, the consolidated financial situation and the consolidated result are similar to the assets, the financial situation and the result of the parent company.

The exemption from consolidation also applies in the following cases:

  • Financial participation companies;
  • The parent company is not a capital company;
  • Small groups (3 criteria referred to in article 27 of the 4th Directive on the annual accounts of limited liability companies – Art 6°1)
  • Companies owned and acting exclusively on behalf of investment companies “Venture Capital “, ” Private Equity “;
  • Companies in the process of liquidation.

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