Last reviewed: July 2026.
When Group Accounts Are Required under IFRS 10 provides a decision-focused guide to the obligation to consolidate, complementing the broader group-accounting requirements and definitions pages.
For the practical mechanics of preparing consolidated financial statements—including goodwill, non-controlling interests and intragroup eliminations—use the Group Accounts under IFRS 10 consolidation guide.
Begin with the parent question
Group accounts are relevant when an entity is a parent because it controls one or more subsidiaries. IFRS 10 uses control rather than ownership percentage alone. An investor controls an investee when it has power over relevant activities, exposure or rights to variable returns, and the ability to use power to affect those returns. Therefore, the first step is to identify all investees and decision-making arrangements, including contractual rights, potential voting rights and delegated authority.
The default rule is consolidation
A parent generally presents consolidated financial statements in which the parent and subsidiaries are shown as one economic entity. Subsidiaries are included from the date control is obtained and cease to be consolidated when control is lost. Different activities, locations, currencies, legal forms or reporting systems do not create an automatic exclusion. A planned disposal also does not end consolidation while control remains, although separate held-for-sale requirements may affect measurement and presentation.
Assess control using current facts
Control can exist with more or less than a majority of voting rights. Consider the dispersion and participation of other shareholders, substantive contractual rights, rights to appoint or remove key decision makers, decision rights over relevant activities and whether a decision maker is acting as principal or agent. Protective rights alone do not create power. Reassess control whenever governance, financing, ownership, options or contractual arrangements change. Document contradictory evidence and the rationale for the final conclusion.
Intermediate-parent exemption
IFRS 10 contains a conditional exemption for some parent entities that are themselves wholly owned subsidiaries, or partially owned subsidiaries whose other owners have been informed and do not object. Other conditions include the entity’s instruments not being publicly traded, no filing for a public offering, and an ultimate or intermediate parent producing IFRS-compliant consolidated financial statements available for public use. Each condition must be evidenced; the exemption is not a general small-group or private-company election.
Investment-entity exception
A qualifying investment entity generally measures particular subsidiaries at fair value through profit or loss instead of consolidating them. The exception depends on the entity’s purpose, investor arrangements and fair-value performance model, not merely on management preference. A subsidiary that provides services related to the investment entity’s investment activities may still need consolidation. A normal trading parent cannot avoid consolidation by describing a controlled business as an investment. The analysis should be reviewed whenever the business model changes.
Separate and consolidated statements answer different questions
Separate financial statements present investments in subsidiaries using the measurement basis permitted by IAS 27, while consolidated statements replace the parent’s investment with the group’s underlying assets, liabilities, income, expenses and cash flows. Preparing separate accounts does not remove the consolidation requirement unless a specific exemption applies. Management should identify which financial statements are required by IFRS, securities regulation, lenders, company law and tax authorities because one reporting package may not satisfy every obligation.
Reporting dates and accounting policies
Once group accounts are required, the parent obtains reporting information for subsidiaries and aligns accounting policies. Reporting dates should be consistent or adjusted within the limits and conditions of IFRS 10. Map local accounts to the group chart, reconcile submissions to approved ledgers and document policy conversions. Difficulty obtaining information is a reporting-control issue, not normally a reason to exclude a subsidiary. Estimates and post-balance-date information may be needed where complete subsidiary data is delayed.
What consolidation requires
The process combines equivalent balances line by line, eliminates the parent’s investment against subsidiary equity at acquisition, calculates goodwill or a bargain purchase, recognises non-controlling interests and eliminates intragroup balances, transactions and unrealised profit. Post-acquisition reserves are allocated between owners of the parent and NCI. Group cash flows exclude internal cash movements. The requirement to prepare group accounts therefore brings a continuing need for entity reporting packages, reconciliation, elimination journals and disclosure controls.
IFRS 12 disclosure connection
IFRS 12 requires information that helps users evaluate interests in other entities and the risks associated with them. Disclosures include significant judgements about control, the composition of the group, material non-controlling interests and restrictions on transferring funds. Investment entities disclose unconsolidated subsidiaries and related risks. Even when an intermediate-parent exemption is used, other accounting and legal disclosures may still apply. The exemption decision and ownership notifications should be retained in the reporting file.
Legal requirements may be different
IFRS 10 determines the accounting requirement under IFRS Accounting Standards, but company law, securities rules, banking regulation and filing frameworks may impose additional or different conditions. Local rules may prescribe filing deadlines, audit exemptions, permitted formats, language, electronic tagging, directors’ responsibilities or additional disclosures. Some jurisdictions provide size-based group exemptions or filing relief; others exclude public-interest entities. Do not import an old local-law summary into an IFRS conclusion. Prepare a separate compliance matrix showing the accounting-standard requirement, statutory requirement, filing requirement and any audit implications, with current legal references.
Decision checklist
List every investee, assess control, identify the control date, test all intermediate-parent exemption conditions, assess investment-entity status, identify service subsidiaries, confirm public-market and filing facts, and check local legal requirements. Obtain owner notifications where required. Record the financial statements that will be produced, reporting dates, policies and disclosure responsibilities. Have the conclusion approved by finance leadership and reviewed when ownership or contracts change. This checklist turns a complex judgement into a controlled, repeatable process.
Related Accounting Guides
- Group Accounts under IFRS 10: Consolidation Guide
- Parent Undertaking and IFRS 10 Control
- Group Accounting Definitions: Control, NCI and Associates
- IFRS 12 Group Disclosures Checklist
Authoritative References
- IFRS 10 Consolidated Financial Statements — Official control-based consolidation and parent exemption requirements.
- IFRS 12 Disclosure of Interests in Other Entities — Official disclosures for subsidiaries and other interests, including significant control judgements.