Consolidated financial statements give company stakeholders a complete, 360-degree view of their multi-entity organization’s financial health. They streamline reporting standards and accounting methodologies, centralize disparate data and create the strong foundation needed for informed decision making and strategy development.
Yet when financial consolidation is done manually, it’s no easy undertaking for finance teams. Manual consolidation requires significant effort to gather data, leaving little time left to analyze it. Processes are more disjointed, statement version control is more difficult and audit gaps emerge.
Data inaccuracies are also much more likely to happen when carrying out financial consolidation manually. In a 2024 survey by Gartner, 59% of financial controllers admitted to making several financial errors per month due to capacity constraints.
Fortunately, financial statement consolidation can be automated and accelerated with dedicated financial consolidation and close software, AI technology and modern methodologies. These new and streamlined methods create greater financial transparency, stronger governance and a more audit-ready environment, powering better-informed strategic financial decisions at every level.
When a technology is introduced with high acceptance by the finance team, Gartner found in the same survey, it can reduce financial errors by as much as 75%.
In this blog, we’ll take a closer look at the financial consolidation process and how to address the pains caused by manual consolidation.
Consolidated financial statements centralize the financial information of a parent company and its subsidiaries into a single report. By doing so, they show the true financial position and performance of the entire organization rather than each entity that is part of it.
While this consolidated view does not replace the individual reports used by each business entity, it’s important to stakeholders such as CEOs, board members, investors and creditors who make strategic decisions for the organization or invest their own resources into its success.
There are three primary components of consolidated financial statements:
These three primary components are also referred to as the three-statement model. By putting standardized processes in place across the three-statement model, companies can eliminate the time-consuming task of starting from scratch each time consolidated financial statements need to be completed in reaction to a specific situation or need.
While private companies don’t have many requirements regarding how they develop consolidated financial statements, public companies in the US must follow GAAP guidelines. International companies must also adhere to IFRS guidelines or other country-specific standards.
Whether your business follows GAAP or IFRS standards, a governed, scalable and audit-ready data environment is critical to creating accurate consolidated statements. This is especially the case for businesses with complex structures where consolidated statements create greater transparency and enable intercompany eliminations (the elimination of transactions between companies under the same ownership). All of this creates more accurate financial reporting and builds trust in the numbers.
“Consolidation provides the actuals that feed the planning process,” Craig Schiff, founder and CEO of BPM Partners, shared with Vena CFO Melissa Howatson on The CFO Show Podcast. “As we do a new forecast, we need actuals-to-date to do that. Consolidation provides that.”
One advantage, Craig says, is to run your consolidation process through the same governed platform as your financial planning and reporting, allowing you to connect the results of your consolidated statements to your greater planning environment. This enables stronger forecasting, a single audit trail, enhanced scalability and a better view of the entire organization.
The first step to developing complete consolidated financial statements is creating a full list of your subsidiaries or companies. This should include every entity in which your parent company has a greater than 50% ownership share, though in some cases that may not be enough.
Standards like IFRS also take into consideration the amount of control a parent company holds, meaning you may also need to consider variable interest entities (VIEs) and entities with an ownership stake of less than 50%, depending on the circumstances of your parent company’s involvement.
For instance, if your parent company owns less than 50% of an entity but controls the board, is involved with key decision making or holds veto rights, you may still need to list them. Make sure you understand the requirements based on the location of your business and how it’s set up.
This list should be reviewed and updated periodically, especially for large companies that may acquire and/or adjust their stake in subsidiaries more often. Any entities in the process of being dissolved will need to be accounted for until that dissolution is complete. And to ensure new entities acquired through mergers, acquisitions or joint ventures are included in a timely manner, finance teams responsible for consolidation should collaborate closely with mergers and acquisitions (M&A) teams and legal departments.
During this step, you’ll also need to collect balance sheets, income statements, cash flow statements and all other relevant financial information from each subsidiary.
Vena makes it easy to consolidate financial statements at the Group level, preserving the Excel interface your team is used to, while sourcing up-to-date numbers from a centralized database.
Next, adjust your reports to streamline their format and structure. Be sure that accounting policies (e.g., revenue recognition processes, depreciation methods, etc.) align with those of your parent company. Creating a group-wide chart of accounts and ensuring each entity is consistently mapping its accounts to it can help accomplish this.
Vena helps identify misalignments between entities and the parent company.
At this point, you should also ensure that consistent requirements around governance are introduced across all entities, including intercompany eliminations, FX translation, ownership logic and adjustments.
Here are a couple other things to remember at this stage:
Finally, it's important to note that when entities span across countries or regions, subsidiaries must still follow local accounting standards (US GAAP, IFRS, etc.) at the entity level. Their statements must then be converted to meet the needs of the parent company’s home region during the consolidation process.
The last step is to consolidate each entity’s reports into a single financial statement. To accomplish this, you must first eliminate:
If a parent company owns less than 100% of the subsidiary, the portion of the equity they own and all related income must be separated out. Entities that have been acquired or dispersed mid-year must also be pro-rated accordingly, based on the acquisition or completion date.
Only once these adjustments are made can line items be aggregated across entities and eliminations and adjustments be made.
Given the number of systems, sources and data your finance teams use throughout this process—including, for many entities, completely separate ERP systems—this step can be especially challenging when done manually, adding inefficiencies and possibilities of human error.
In a manual environment, it’s also more difficult to establish a shared view for the individuals and teams working together on developing your consolidated financial statements.
Vena makes it easier to view all entities together within your consolidated reports.
It’s important to understand the key difference between consolidated financial statements and combined financial statements. These terms are often used interchangeably, but actually refer to two different types of reporting:
Combined financial statements report on the finances of both your parent company and subsidiaries, but they maintain them as separate reports within a single document.
Consolidated financial statements fully integrate the financial information of your subsidiaries with that of your parent company in a singular report that demonstrates your parent company's financial position.
“The hardest part of manual consolidation isn't the arithmetic; it's that the logic lives in people and linked workbooks rather than in a system."
Harjot Ghai, Chief Operating Officer, Delbridge Solutions
Consolidating financial statements is possible through manual methods, but it’s difficult to manage and strategically detrimental in today’s environment, where mergers and acquisitions are expanding, talent shortages have made finance teams smaller and tariffs are adding to pricing instability. Strains like these make automated financial consolidation more critical than ever.
"The hardest part of manual consolidation isn't the arithmetic; it's that the logic lives in people and linked workbooks rather than in a system,” says Harjot Ghai, Chief Operating Officer at Delbridge Solutions, a consulting firm that supports businesses with overhauling their financial systems and processes.
“Each new entity adds intercompany relationships with every other entity, another currency to translate, and often an ownership structure that shifts after an acquisition. The spreadsheet that worked for five entities becomes unmanageable at fifteen, and usually only one or two people understand how it all fits together.”
Harjot adds: “The consequences are practical: intercompany differences get plugged to meet deadlines, a key controller's departure puts the close at risk and board or lender reporting goes out late. Meanwhile, finance spends close week assembling numbers instead of analyzing them, and FP&A builds forecasts on actuals that aren't final.”
Strains like these make automating financial consolidation more critical than ever. To see how automation fills those gaps, let’s look at three of the biggest challenges that organizations encounter using manual methods for financial consolidation and how to overcome them, as demonstrated by real Vena clients.
Manual consolidation methods take up so much of your team’s time chasing files, merging spreadsheets and taking part in other preparatory (often tedious) tasks that often by the time they’re finished, it’s already time to begin working on the next month's close. That leaves less time to focus on the actual analysis that will inform your decision making.
At FirstService Residential, one of the largest property management firms in North America, their finance team knew the pain of manual consolidation all too well.
The company was spending its time compiling thousands of Excel files and workbooks. Each workbook had multiple tabs: in excess of 30 tabs in some cases, says Robbie Phillips, their FP&A Director.
After adopting Vena, FirstService was able to centralize data across markets, regions and divisions. They increased financial reporting transparency and consolidated FP&A data 90% faster than they were previously able, saving hours of time that could be redirected to more meaningful, strategy-driving work.
Read FirstServices’ full story.
Static reports and disconnected data make it hard to understand, explain and defend consolidated results, especially when manual, spreadsheet-based consolidation methods lead to inevitable inaccuracies and errors.
As a result, Finance is often left rebuilding logic manually. Or the broader business, faced with incorrect results, quickly loses trust in the numbers.
"When a CFO asks why gross margin moved two points, a team working in linked spreadsheets has to reverse-engineer the answer through hardcoded values and overrides, and that hesitation erodes trust faster than an actual error would,” Harjot says. “The result is shadow spreadsheets, ‘which version is final?’ emails and executives discounting what they see.”
That's the problem Mitsubishi Chemical Group, the world’s largest producer of methacrylates, was facing.
When their Director of Finance, Cindy Tynan, joined the company in 2010 (she was an internal auditor then) their forecasting and budgeting processes across entities was cumbersome and time consuming. That’s because their workflows were manual and as a result, massively disjointed.
Spreadsheets were unreliably linked through Excel formulas, collaboration was difficult and they experienced constant errors and accuracy issues. “I always dreaded those conversations where data owners would want to change their data inputs, because that meant I had wasted four to six hours of my time,” Cindy says.
The company desperately needed a streamlined consolidation workflow—one that allowed for real-time collaboration and higher accuracy across statements and other reports.
They worked with ProLytics Consulting Group to implement Vena as their solution to this challenge, and as a result have been able to standardize reporting processes for more meaningful comparisons across business areas, including better upward reporting to their parent company.
Read Mitsubishi Chemical Group’s full story.
Manual adjustments and disconnected workflows create audit risk and expensive validation work at period end. Finance is left proving the numbers after the fact instead of trusting the process that produced them.
"Spreadsheets make controls hard to evidence,” Harjot says. “Auditors assess not only the final number but whether they can rely on the process behind it, and a manual environment offers no dependable record of who changed a formula, when a hardcoded value replaced a link, or who approved a top-side adjustment.”
Take OEG—a leading energy solutions business—as an example. Rapid growth through global expansion introduced new complexities to their financial consolidation process, with 90 legal entities across 19 currencies to consolidate. Yet when Claire Kerry joined the company as Senior FP&A Analyst, there was still no formal consolidation system. Everything was done manually through Excel, and they were losing control of their data as a result.
"People could go in and edit things after month-end, changing results that you might not necessarily pick up,” Claire says. “Anytime somebody moved a file, renamed a file or didn't use the right abbreviation, it broke everything."
Through Vena, OEG replaced their manual consolidation process with a central platform that consolidated financial results across all their global entities. Not only has this saved them time and allowed them to generate new insights through a reliable source of connected data, but it’s also strengthened governance through standardized reporting, version control and consistent data structures.
Read OEG’s full story.
Automation creates new efficiencies that opens up time for more high-value strategic planning work. Speaking from experience working with Delbridge's clients, Harjot says: “Organizations moving from manual to automated consolidation have cut month-end close times by as much as 50%.”
He adds that the biggest gains usually come from three places. “The first is intercompany, where automated matching replaces rounds of emails between entity accountants and surfaces mismatches during the close rather than at the end of it. The second is data collection, as loading trial balances from multiple ERPs stops being a copy-paste exercise. The third, and most overlooked, is late changes. In a manual model, one late journal entry at a single subsidiary means re-rolling FX translation, eliminations and every downstream report. In an automated environment, it's simply a reprocess, and since late adjustments happen in almost every close, that's often where teams recover the most time.”
What's more, using AI-powered software to consolidate financial statements delivers additional benefits that make for more transparent, accountable, efficient and accurate financial reporting.
Let’s look at five of these important benefits.
Since automation software does most of the core consolidation work for you, finance teams can essentially introduce a steady-state close. This reduces the inefficiencies involved with manual work without adding headcount or heavy administration. If there are any questions, AI agents can answer them, giving responses to queries ranging from how much group revenue came from eliminations to which entities haven’t loaded their trial balance for the month.
By replacing static spreadsheets with reliable reporting, workflow management, proper version control and AI-amplified analysis in one governed environment, teams can improve confidence in the final numbers, reduce time spent defending results and act on information more easily. This also ensures accurate company valuations.
Through embedded controls, traceability, AI-enabled workflows and a system-generated audit history, financial consolidation software can drive faster review and understanding throughout the consolidation process without compromising governance.
By running consolidation on the same governed platform as financial planning and reporting, Finance has one version of the truth across plan, actuals and close, reducing disconnects. This helps inform better decision making.
Automated consolidation makes the process of filing your taxes less time-consuming and more simplified with standardized, centralized reporting. By adding transparency and trust in the numbers and closing audit gaps, it also helps you stay confident that what you’re filing is accurate and comprehensive.
A streamlined financial consolidation process helps companies reduce their tax liability by offsetting profits and losses across subsidiaries, providing access to tax incentives, deducting intercompany transactions and improving cash flow management for better planning.
When Finance relies on a manual financial consolidation process, the whole business suffers. Not only does your financial close process take up to 15 days to complete, putting you in a perpetual state of working on your close, but other business units lose trust in the numbers you produce. All the while, audit gaps make it difficult to maintain compliance.
Between crunching the numbers and defending them, there's little time left in that environment for the analysis needed to keep pace with the market.
Vena Financial Consolidation helps you overcome those challenges: the Excel-native, AI-amplified financial consolidation solution replaces manual, spreadsheet-driven consolidation with a governed system for intercompany eliminations, FX translation, ownership logic and audit-ready reporting. It also connects consolidation, planning and reporting on the same governed platform.
The result: Finance closes the books faster, has more trust in the numbers and remains audit-ready no matter what.
Attend our free webinar on September 22 and learn how you can connect close, consolidation, and reporting in a single governed platform.
Register NowLisa Van de Ven, Senior Content Specialist
Lisa Van de Ven is a senior content specialist based out of Toronto, Canada. A former journalist, she now writes, edits and plans content for businesses of all sizes, including SaaS and technology enterprises. She’s worked for global brands that include Oracle, OpenText and Vena, engaging with experts and audiences to create content that gets noticed.
