Types of Financial Statements

As we approach the end of 2025, we will outline some concepts, characteristics, and key differences in this newsletter, providing practical and comprehensive information:

In the accounting and financial reporting environment, particularly under International Financial Reporting Standards (IFRS), business groups are often required to present joint financial information. However, not all joint presentations are the same. Two concepts that frequently cause confusion are consolidated financial statements and combined financial statements. Below, we explain their main differences in a clear and practical manner.

Below, we explain their main differences in a clear and practical manner.

Consolidated Financial Statements

Applicable standard: IFRS 10.

Consolidated financial statements present the financial position, performance, and cash

flows of a group of entities as if they were a single economic entity.

Key Characteristics:

1. (subsidiaries).
2. Control is generally defined as the power to govern the financial and operating policies of another entity.
3. All intragroup balances and transactions are fully eliminated; Intercompany revenues and expenses.
4. Non-controlling interests are recognized, when applicable.

Combined Financial Statements

Applicable standard: There is no specific IFRS; Reference section 9 IFRS for SMEs and also are prepared using consistent accounting policies and adequate disclosures.

Combined financial statements present the financial information of two or more entities that do not necessarily have a parent–subsidiary relationship or are under common control, common ownership, or common management, or share a common business purpose.

Key Characteristics:

1. There is no formal parent entity consolidating the other entities. 
2. The financial statements of the entities included are aggregated.
3. Transactions between the combined entities are eliminated to avoid duplication.
4. Non-controlling interests are not presented.

The key difference between these two types of financial statements lies in the existence of control. Consolidated financial statements are mandatory when a parent–subsidiary relationship exists, while combined financial statements are a practical reporting tool forpresenting joint financial information in more flexible business structures.

Understanding this distinction is essential to ensure regulatory compliance and appropriate financial reporting for regulators, investors, and other stakeholders.

Separate Financial Statements

Applicable standard: IAS 27 

The objective is to present the financial position and performance of the investor entity on a standalone basis. 

Key Characteristics:

1. Investments are accounted for at cost or in accordance with IFRS 9 – Financial Instruments.
2. Assets, liabilities, income, and expenses of the investees are not aggregated.
3. They are commonly presented in addition to consolidated financial statements.

Individual Financial Statements 

Applicable standard: Full IFRS or IFRS for SMEs, as applicable.

The objective is to present the financial information of one entity as a standalone business, as they correspond to the financial statements of a single entity that does not have subsidiaries or not required to prepare consolidated financial statements.

Key Characteristics: 

1. Reflect only the entity’s own transactions, assets, liabilities, income, and expenses.
2. Do not include results of other entities, except for ordinary financial investments.
3. They are the most common type of financial statements for independent companies.

The key difference between these two types of financial statements lies in the existence of control. Consolidated financial statements are mandatory when a parent–subsidiary relationship exists, while combined financial statements are a practical reporting tool for presenting joint financial information in more flexible business structures.

Understanding this distinction is essential to ensure regulatory compliance and appropriate financial reporting for regulators, investors, and other stakeholders.