What exactly is a good consolidated financial statement and how should it be designed to attract reading?
Here you will find the best tips to help you create a consolidated financial statement that becomes something out of the ordinary.
This is a consolidated financial statement
In addition to the usual annual report, parent companies need to prepare a separate consolidated financial statement. The purpose of the consolidated financial statements is to describe the group’s financial status from the perspective of both the parent company and (at least) the joint permission of the subsidiary.
This is called consolidation when you merge the parent company and the subsidiaries’ financial statements into a whole. Before consolidation can be carried out, the transactions that have taken place between the various companies in the Group need to be eliminated. Once this is done, the consolidated financial statements can be presented.
This is what a consolidated financial statement should include:
It is largely statutory what a consolidated financial statement should contain. The most important thing is that the consolidated financial statements give a realistic picture of the Group’s financial situation.
- Certificate of declaration. A document certifying that the income statement and balance sheet are adopted by the Board of Directors and the CEO during the Annual General Meeting.
- Management report. Information on the Group’s development, position, results and important events that have taken place during the past year.
- Consolidated balance sheet. a merger of the balance sheets of the parent and subsidiary undertakings in which certain items have been eliminated;
- Consolidated income statement. A reflection of the Group’s total earnings, where all internal profits were eliminated.
- Cash flow statement. A summary of the Group’s annual money flows.
- Sheet music. Consolidated financial statements also include a list of subsidiaries and other associates.
Consolidated financial statements also provide an opportunity to build trust and interest around the Group.
These companies must prepare consolidated financial statements
In short, virtually all parent companies covered by the Annual Accounts Act need to prepare a consolidated report. However, there are some exceptions:
- Small groups do not need to present any consolidated financial statements
- In some cases, parent undertakings which are also subsidiaries are not required to prepare consolidated financial statements
- If the parent has subsidiaries without material significance, consolidated financial statements are not required
More detailed information about who needs to prepare consolidated financial statements can be found here.
How often you should prepare consolidated financial statements
Just like an annual report, consolidated financial statements are prepared once a financial year. You report on the group at the end of each financial year.
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Consolidated financial statements don't have to be boring!
In particular, consolidated financial statements shall provide an easy-to-understand insight into the financial situation in the last financial year.
Let your creativity flow and attract reading. A well-thought-out and well-prepared consolidated financial statements gives you an excellent opportunity to strengthen your brand and build trust and interest around the Group as well as inspire your employees. Tell the story about you, why do you exist and what makes you unique.
With thoughtful design and inspiring storytelling, you can ensure that you spread important information that motivates the reader. So how do you do it?
The group report gives you a chance to create interest around the group. It should give an insight into what the Group is working on, what your goals are and what situation you are in today. With the help of storytelling, you can improve how the reader experiences your business, both during reading and afterwards.
The benefits of using storytelling in consolidated financial statements are many
Builds trust in your brand
The financial status of the group is important to present, but you also have the opportunity to show other types of data and details that may be relevant in other ways. The data you present can give an insight into where you put the money, how you work and what effect it gives.
Showing your values
With the help of storytelling, you can also share the group’s values. Be transparent about how you work with sustainability, inclusion and diversity – it can have a big impact on how the reader perceives you.
Make the people behind it visible
In group accounting, the people behind it can have the opportunity to step forward and tell what they are doing to take the group forward. It adds a reality-based touch to group accounting, while employees feel valued.
Create a design that strengthens your brand
Do not lose focus on the purpose behind consolidated financial statements – to share important (and statutory) information. It should be easy to navigate correctly and the reader should be able to effortlessly find the information he or she is looking for.
Before you get started with the layout of your consolidated financial statements, there are a few points that can be good to keep in the back of your mind.
- Divide consolidated financial statements into clear parts, visually
- Start with a page that summarizes consolidated financial statements content
- Think through the choice of font, so that the information is easy to read
- Be sure to only include images and graphs that add something
- Reduce large masses of text to summary paragraphs and bullet points
- Be sparing with colours – preferably don’t use more than three
Visualize your data
The graphic design you use in your consolidated financial statements should follow the same profile as the one you use in the brand. This also applies to graphs and tables.
Presenting data in an easy-to-understand manner is important, especially when it comes to more negative-sounding information. Be clear when presenting the facts and present any solutions to move forward. Take advantage of the library of icons, colors, and fonts available online to ensure that the data you present tells the reader something. With the help of good infographics, you can explain the complex situations that your data describes.
Covers that capture interest
You shouldn’t judge the book by its cover, but we all do anyway, whether we want to or not. Therefore, put a little extra gunpowder on the front of the consolidated financial statements.
Nowadays, consolidated financial statements are usually presented in the form of a downloadable pdf, which means that you can take great liberties in terms of design. Let the cover reflect the content of the report with photographs or graphic elements, along with elements that set the tone for the graphic bit in the rest of the report.
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