Consolidated financial statements

A buyer of a holding company, or of a business that sits in a group, may be handed statements for the whole group. IFRS 10 requires a parent that controls other entities to present consolidated statements, and the IFRS Foundation’s summary notes an exemption from presenting them and an exception for particular subsidiaries of an investment entity. Because group statements present the parent and subsidiaries as a single economic entity, ask for each entity’s own statements as well. See how to verify a seller’s financial statements.

Subsidiary statements in Alberta

Section 157(1) of the Business Corporations Act (Alberta) requires a corporation to keep at its records office a copy of the financial statements of each subsidiary body corporate and of each body corporate whose accounts are consolidated in its own. Under section 157(2) its shareholders and their agents and legal representatives may examine them on request during usual business hours, and under section 157(3) the corporation may apply to the Court to bar that right, which the Court may do if satisfied the examination would be detrimental to the corporation or a subsidiary body corporate. This entry covers Alberta only; check the rules where you are.

What to ask

• Which entities are in the consolidation, and which one is being sold.
• Whether the statements are audited, reviewed or compiled. See annual financial statements.
• Which accounting framework the statements use.