Question 1 and 2
France
Overview
“The Plan” – national uniform chart of accounts (national accounting code)
Objectives and principles of financial reporting
Definitions of elements
Recognition and valuation rules
Standardized chart of accounts
Model financial statements
Other influences on French accounting rules
Commercial legislation (Code de Commerce)
Tax laws
Accounting regulation and enforcement
CNC – National Accounting Board
Keeps plan current
Makes rulings and recommendations on accounting issues
CRC – Accounting Regulation Committee
Converts CNC rulings and recommendations into binding regulations
ANC – National Accounting Authority
Will replace CNC and CRC as the national standard setter
AMF – Financial Markets Authority
Supervises securities markets
OEC – Institute of Public Accountants
Represents the accounting profession
Members prepare financial statements, and provide tax, information systems, and management advisory services
CNCC – National Institute of Statutory Auditors
Members audit and give an opinion on financial statements
Must report criminal acts to the High Council of External Auditors
Substantial overlap in OEC and CNCC membership
Statutory auditors not allowed to provide accounting services to the same client
AMF oversees audits of listed companies, but relies on a committee of the CNCC to conduct audit-quality reviews
Unusual features of French financial reporting
Must report results of environmental activities
Reports aimed at preventing bankruptcies
Social report
GERMANY
Overview
Creditor protection
Conservative balance sheet valuations
Reserves as protection against unforeseen risks and insolvency
Accounting is designed to compute a prudent income amount that leaves creditors unharmed after distributions are made to owners
Influence of tax law
Determination principle: taxable income is determined by what is booked in a company’s financial records
Reliance on statutes and court decisions
Accounting regulation and enforcement
German Commercial Code (HGB)
Applies to all business entities
German Accounting Standards Board
Develops recommendations for consolidated financial statements
Financial Reporting Enforcement Panel
Enforces compliance with German financial reporting requirements and IFRS by listed companies
Chamber of Accountants
Oversees WPs (“enterprise examiners”)
Unusual features of German financial reporting
Auditor’s private report to board of directors and supervisory board on company’s future prospects
Czech Republic
Overview
Accounting changed directions several times in 20th century, reflecting the country’s political history
Until end of World War II – German influences
After World War II – Soviet influences
After 1989 – EU influences (market orientation)
Accounting regulation and enforcement
Ministry of Finance
Oversees Commercial Code (modeled on German commercial law)
Oversees Accountancy Act (based on EU directives)
Chamber of Auditors
Oversees auditors
Unusual features of Czech financial reporting
Form over substance still applies in some cases
Still implementing accounting practices consistent with EU directives and IFRS
The Netherlands
Overview
Accounting paradoxes
Permissive requirements, but high professional practice standards
Code law country whose accounting is oriented toward fair presentation
Fair presentation orientation developed without a strong stock market
Other influences on Dutch accounting
U.K. and U.S. as much as continental European countries
Accounting profession
Business economics (microeconomics approach)
IASB
Accounting regulation and enforcement
Company law – Act on Annual Financial Statements
Dutch Accounting Standards Board
Develops guidelines on generally acceptable accounting standards
Netherlands Authority for the Financial Markets
Supervises operations of securities markets
Oversees financial reporting and auditing of listed companies
Enterprise Chamber