In the context of streamlining administrative and public service structures, many units merged from former agencies are facing difficulties in preparing financial statements. A common question currently is: "If the newly merged unit has no subsidiaries, is it still necessary to prepare consolidated financial statements according to Circular 108/2025/TT-BTC?"
This article will provide detailed answers based on the latest feedback from the Ministry of Finance.
A real-world case study on whether consolidated financial statements are required for mergers of entities.
The situation is as follows:
“The unit was formed by merging two former units, with no subsidiaries. The former units have prepared financial statements and settlement reports for the first six months of 2025; the new unit has prepared reports for the last six months of 2025. Currently, the superior unit is requesting the preparation of consolidated financial statements and settlement reports in accordance with Circular No. 108/2025/TT-BTC. In this case, is the unit obligated to prepare consolidated financial statements and settlement reports?”
Scope of application of Circular 108/2025/TT-BTC
As stipulated in Clause 1, Article 1 Circular No. 108/2025/TT-BTCThe scope of this document is clearly defined:
"This Circular stipulates and guides the principles and methods for preparing and presenting consolidated financial statements of administrative and non-business accounting units with subordinate accounting units."
Therefore, the "key" here lies in the phrase "having a subsidiary accounting unit." Consolidated financial statements are designed to summarize the financial picture of an administrative "group" or a parent company with subsidiary or subordinate units that each have their own accounting departments.
Does a merged entity with no subsidiaries need to prepare reports?
Based on the principle stated above:
- If your entity does not have a subsidiary accounting unit, it is NOT required to prepare consolidated financial statements according to Circular 108/2025/TT-BTC.
Even if your new entity is formed from the merger of two old entities, if after establishment the organizational structure consists of only a single accounting unit (without "branches" or dependent accounting units), then preparing consolidated financial statements is unnecessary and not in accordance with regulations.
How to handle reports during the transition year (2025-2026)
For the specific case you mentioned (the two old units preparing the first six-month report, the new unit preparing the last six-month report of 2025), the procedure is as follows:
- Separate financial statements: The new entity only needs to prepare its own financial statements for the accounting period from its establishment to the end of the fiscal year. Data from the two former entities will be transferred and processed according to the regulations on financial transfer during mergers/consolidations.
- Final settlement report: The unit shall prepare the final settlement report according to the instructions provided. Circular No. 24/2024/TT-BTC and guidelines for annual budget settlement.
Do not confuse “Unit Consolidation” with “Report Consolidation”:
- Unit consolidation is the merger of legal entities.
- Consolidated reporting is an accounting technique used by a higher-level entity to aggregate data from its subordinate units.
Conclude
Therefore, according to the latest regulations from the Ministry of Finance, the preparation of consolidated financial statements only applies to units acting as the superior accounting unit with subordinate units. Units that have been merged but are organized as separate entities without subordinate units with their own accounting departments are not subject to the regulations of Circular 108/2025/TT-BTC. These units only need to focus on completing their individual financial statements and final accounts reports according to the correct accounting period for submission to the superior authority.
Contact information MAN – Master Accountant Network
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Content production by: Mr. Le Hoang Tuyen – Founder and CEO of MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Frequently Asked Questions about Preparing Financial Statements and Consolidated Settlement Reports
My old unit had subordinate units, but after the merger, the new unit doesn't have any subordinate units. What should I do?
The preparation of consolidated financial statements is based on the organizational structure of the current accounting entity. If the new entity no longer has subsidiaries, you do not need to prepare consolidated financial statements for the new entity.
If I don't prepare a consolidated report, do I still have to submit reports from the two old entities?
Typically, during mergers, the figures of the old units are finalized at the time of cessation of operations and handed over to the new unit. The superior unit will base its monitoring on the handover minutes and individual reports from the new unit.
