Consolidated financial statements in the public sector

Abstract

This chapter discusses the main issues related to consolidation in the public sector. It provides a general description of consolidation theories and methods adopted in both the private and public sectors. The chapter focuses on the specific benefits and users of Consolidated Financial Statements (CFS) in the public sector. It gives an international overview of the different ways to define the area of consolidation. A detailed description of specific International Public Sector Accounting Standards (IPSAS) on consolidation follows with particular attention to the benefits and limits of the IPSAS approach and alternative approaches to the IPSAS. The chapter presents a short description of some experiences such as the European Commission, Swedish and Dutch local governments of consolidation in the public sector. The consolidation methods should represent the different types of influence the public sector entity has on its subsidiaries.