The fundamental financial reports in Republic of Croatia composes on the end of every business year. Report represent base and a starting basis for analysis of company business to get needed information about it. They must offer true and objective picture of financial position and success of company business. Financial accounting for business mergers is regulated eith International Financial Reporting Standards for large companies and companies that are listed on capital markets. Finacial reporting in small and medium enterprises is regulated by Croatian Financial Reporting Standards. As soon the parent company gains control over another enterprise, or more enterprises, the parent company must prepare consolidated financial statements in which will merge their financial statements and the financial statements of its subsidiaries. In the process of consolidation it is important to eliminate transactions that occurred between the parent and its subsidiaries in order to achieve view of the group's business as one. In the process of consolidation it is first necessary to sum up identical items and then eliminate receivables and liabilities, revenues and expenses, gains and losses between consolidating entities. The aim of this work is a literatur review of financial reports analysis. Complaining of consolidated financial reports, respectively methods and procedures of consolidation and on an example show process and the way of the production of consolidated financial reports.