The request is always phrased in the same modest way. The family would like one page, updated periodically, showing what it owns and what it is worth. It sounds like a reporting task and it is treated as one, usually by asking whoever handles the accounts to put something together.
What arrives instead, several weeks later, is a spreadsheet with caveats. The property in one country is at cost because the last appraisal is four years old. Two accounts are stated in different currencies because nobody decided which rate to use. The operating company figures are from a year end that does not match the others. The private fund holding is at the manager’s last reported value, which is a quarter behind. The family looks at the total, asks whether it is right, and receives an answer that begins with the word broadly. Consolidated reporting across several countries is not a formatting exercise. It is a series of decisions about method, and until those decisions are made and written down the number at the bottom cannot mean anything.
Decide what the report is for
The first question is what the picture is meant to support, because different purposes require different bases and no single statement serves all of them well.
A statement of net worth answers what the family is worth today and is used for planning, credit applications and estate work. A performance report answers how the capital has done over a period and needs a discipline about flows that a net worth statement does not. A liquidity report answers what could be turned into cash and how quickly, which is the report families most often lack and most urgently need in a crisis. A risk report answers what the family is exposed to by currency, sector, counterparty and country. And a tax report answers what is owed where, which almost never uses the same figures as any of the others.
Attempting to produce one document that does all five produces a document that does none of them. The workable approach is a core statement plus defined supplements, all drawn from the same underlying data so that they reconcile to each other.
The inventory comes before the reporting
Before any of this can be produced there has to be a complete list of what exists, and that list is usually the part that takes longest.
It means every entity, with its jurisdiction, its registration number, its ownership chain and its financial year end. Every bank and custody account, with the institution, the holder and the base currency. Every property, with the entity that owns it, any mortgage over it and the date of its last valuation. Every private holding, loan, guarantee and policy. Every intragroup balance, which is the category most often incomplete because loans between family entities are frequently undocumented.
Families are consistently surprised by two findings at this stage. There are more entities than anyone believed, several of them dormant and still incurring annual costs. And the ownership chain as documented differs in at least one place from the ownership chain as everybody remembers it.
Until this inventory exists and is maintained, any consolidated report is a report on the assets somebody happened to remember.
Currency: pick a rate and write down which one
Once assets are held in several currencies, the total depends on a methodological choice, and the choice has to be made once rather than each time.
Three decisions are needed. Which currency the report is presented in, which is usually where the family lives and spends but may reasonably be the currency of its liabilities. Which rate is used, meaning a specific published source at a specific time on the reporting date rather than whatever the spreadsheet retrieved. And how movement is treated, since a portfolio that gained in local terms and lost in presentation terms has to be shown both ways or the family will draw the wrong conclusion about its manager.
The last point is where most reports mislead. Currency movement is often the largest single contributor to a period result, and a report that folds it silently into performance credits or blames managers for something they did not do. Separating asset return from currency effect is not a refinement. It is the difference between a report that informs and one that misinforms.
Fiscal calendars that refuse to align
Entities in different countries have year ends imposed or chosen for local reasons, and audited figures become available on local timetables. A family holding an operating company with one year end, property companies with another and portfolios reported monthly cannot produce a consolidated statement in which every component is final.
There is no way to make this problem disappear, so it has to be managed explicitly. The family fixes its own reporting date and uses it consistently. For entities whose audited accounts are not yet available, management figures are used and labelled as such, with the audited numbers substituted later and the prior report restated. Every line carries the date of the information it is based on, so that a reader can see which parts of the picture are current and which are not.
That last convention does more for credibility than any amount of presentation. A number dated three months ago and labelled as such is useful. The same number presented as current is a defect.
Valuing the half that has no price
Listed securities have a price. Most of the rest of a family balance sheet does not, and this is where consolidated statements become genuinely difficult.
Real estate requires a policy: independent appraisal at a stated interval, indexation between appraisals, or historic cost with the appraisal date disclosed. Any of these can be defended. What cannot be defended is revaluing selectively, which in practice means revaluing the assets that have gone up.
Operating businesses are harder still, because a family business has no market price and a valuation prepared for one purpose is rarely appropriate for another. Many families sensibly carry the business at book value in the routine statement and commission a proper valuation only when a decision requires it, disclosing that this is what they have done.
Private funds are carried at the manager’s reported value, which lags and is prepared on the manager’s own basis. Unfunded commitments belong on the report as well, since they are obligations even though they are not yet investments.
Art, vehicles and collections are frequently omitted altogether, which is defensible provided the omission is stated. A total that silently excludes a material category is worse than one that shows a lower figure honestly.
Consolidating is not the same as adding up
A distinction that causes real confusion is the one between aggregation and consolidation.
Aggregation lists every asset the family holds and adds the values together. It is simple, it is what most family reports actually do, and it double counts wherever one family entity holds a claim on another. A shareholder loan appears as an asset at the top and never as a liability below, and the total is overstated by the amount of it.
Consolidation eliminates those internal balances so that the total represents the family’s position against the outside world. It requires the intragroup schedule that most families do not have, and it requires deciding how to treat partly owned entities, since including all of a company the family owns in part overstates the position just as excluding it entirely understates it.
Neither approach is wrong. Reporting on one basis while describing it as the other is.
Where the data comes from
The practical constraint is that this information has to be gathered from institutions that were not designed to cooperate with each other.
Custody data can generally be automated through standard feeds where the institutions support them, and that should be pursued because it removes the largest source of manual error. Everything else tends to arrive as documents. Property managers send statements, operating companies send trial balances, fund administrators send capital account statements, and each does so on its own schedule in its own format.
The realistic model is therefore a hybrid: automated where feeds exist, a fixed request cycle where they do not, and a single person accountable for chasing what has not arrived. Software helps, and no software solves the underlying problem, which is that somebody has to obtain the figures and decide what they mean.
Access itself has to be arranged rather than assumed. Institutions will not release information about an entity to a person who is not authorised on it, and authority granted for one account does not extend to another. Setting up the standing authorisations, in the form each institution requires, is unglamorous work that has to be done once and refreshed whenever a director or signatory changes. Families that skip it discover the gap at the worst moment, which is when the person who held all the access is the one who is no longer available.
What a reliable picture actually requires
Reduced to its essentials, the requirement is short and mostly organisational rather than technical.
A maintained inventory of entities and assets. A written methodology covering currency, valuation and consolidation, agreed once and applied consistently. A fixed reporting date with figures dated line by line. One named party accountable for producing the report, with the authority to obtain data from every adviser. A distinction between the routine statement and the deeper analysis commissioned when a decision requires it. And an annual review of the method itself, since families acquire assets in new forms and the policy has to keep up.
It is worth adding that the first version of the report will be wrong in places, and that this is not a reason to delay publishing it. Errors surface only when somebody who knows the assets reads a statement that claims to describe them. A report circulated quarterly and corrected in public converges on accuracy far faster than one refined privately until it is ready.
The families that have this are not the ones with the most sophisticated systems. They are the ones that made the methodological decisions deliberately, wrote them down, and accepted a slightly less precise number in exchange for one they can rely on.
This article is informational. It does not constitute investment advice, an offer, or an invitation to invest, and it is not a financial promotion. Regulated activities are carried out only by appropriately licensed parties.