German Accounting Principles: An Institutionalized Framework.

Abstract This article provides an understanding of the German accounting principles which apply to limited liability companies. Harmonization has to take the socio-economic conditions of the individual countries into account. The accounting principles have evolved in Germany over centuries and their meaning has changed according to the changing environment they operate in. The growing internationalisation of accounting, resulting from capital market developments, has induced necessary adaptations of the principles. The International Accounting Standards Committee (IASC) is pursuing the worldwide acceptance and introduction of its International Accounting Standards (IAS). These standards are largely based on Anglo-Saxon principles of accounting, which give priority to the matching of revenues and expenses, as compared to the continental European principle of conservatism. The IASC and the International Organization of Securities Commissions (IOSCO) agreed, that IOSCO will use its influence to encourage the usage of the IAS. Discussion papers relating to accounting issues, such as foreign currency translation, accounting for leases and accounting for subsidies and grants, which have been presented by the Accounting Advisory Forum of the European Union Commission, are largely based on the IASC standards.