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SAP AG 2003
International Financial Reporting Current Trends:
Contents
Consolidated financial statements
according to IAS or U.S. GAAP
Harmoniation of financial reporting in !urope
!ffects on indi"idual financial statements
#ifferences in financial accounting
Contents:
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SAP AG 2003
Gi"e e$amples of international trends
Gi"e e$amples of t%e differences &et'een t%e "arious
financial accounting met%ods
Gi"e e$amples of t%e possi&le effects on indi"idual
financial statements and on consolidated financial
statements
International Financial Reporting Current Trends:
Unit (&)ecti"es
At t%e conclusion of t%is unit* +ou 'ill &e a&le to:
SAP AG AC206 2-2
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("er"ie' #iagram
AC206
Implementation Pro)ect
Implementation (ptions
Current Trends
,alance S%eet Items
and Reporting
SAP AG AC206 2-3
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-our compan+ is e$amining trends in e$ternal financial
reporting on national and international le"els.
T%e compan+ is particularl+ interested in t%e effects on
indi"idual financial statements and consolidated
financial statements.
,usiness Scenario
SAP AG AC206 2-4
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Consolidated Financial Statements According to
International Rules . Standards
Access to international capital mar/ets
Access to international sales mar/ets
Indi"idual financial statements are su&)ect to "arious local re0uirements
USA
1!2
AR
!
F
#
3
International financial statements are becoming
increasingly important
Compared with individual financial tatement! conolidated financial tatement are "ecomin# more
and more important$ Individual financial statements form the basis for the u"e%uent
consolidated financial statement$
&wo reaon for the increain# importance of the conolidated financial tatement'
Current le#ilation'
(aw on accounta"ilit) and tranparenc) in enterprie' Supervior) "oard mut now alo audit
conolidated financial tatement$
(aw to facilitate the raiin# of capital
&he individual financial tatement of pecific u"idiarie can "e compiled on a implified
"ai without anne*e! review of operation! audit! and dicloure$
German law #overnin# corporation and companie
Additional accountin# re%uirement appl) for mall-cale #roup$ Specification re#ardin# i+e
have "een halved$ &he individual financial tatement of additional compan) u"idiarie can "e
prepared in a implified form$ Sanction have "ecome tricter a re#ard non-compliance$
Pu"lihin# practice'
(ar#e companie uuall) pu"lih conolidated financial tatement$
SAP AG AC206 2-,
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SAP AG 2003
Harmoniation of Financial Reporting in !urope
In the future, the IAS will facilitate the
harmonization of financial reporting in Europe:
In !urope* IAS 'ill &e re0uired as t%e group
met%od of accounting.
Indi"idual financial statements according to IAS
'ill &e a prere0uisite for listings on some stoc/
e$c%ange.
-n future! -AS will "e ued to harmoni+e financial reportin# in .urope:
-n .urope! the -AS will "e re%uired a the #roup method of accountin#$
./ #uideline re%uire the introduction of conolidated financial tatement in compliance with
-AS in the )ear 200,$
Conolidated financial tatement are increain#l) conformin# to -AS or /S-GAAP
Acce to international capital mar0et 1"an0 financial tatement -AS2
Acce to international ale mar0et
-ndividual financial tatement are u"3ect to variou local re%uirement$
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!U #ecision
4556 4557 4555
Strateg+
document
appro"ed
IAS &ecomes o&ligator+ t%roug%out t%e !U for
companies listed on t%e stoc/ e$c%ange
-n the future! -AS will "e ued to harmoni+e financial reportin#$
Strate#) document from the .uropean Commiion
4n 5une 13! 2000! the trate#) document wa approved ") the ./ Council of 6initer$
7rom 200,! -AS conolidated financial tatement will "e o"li#ator) throu#hout the ./ for
companie lited on the toc0 e*chan#e
7rom 2008! financial tatement will "e o"li#ator) for all companie that raie capital on the
capital mar0et$
SAP AG AC206 2-8
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!ffects on Indi"idual Financial Statements
Caution: International financial reporting 'ill not &e
restricted to consolidated financial statements.
Indi"idual financial statements 'ill also &e affected.
Consolidated financial statements 'ill &e more
t%an )ust a consolidation tas/.
8ocal GAAP and financial statements for ta$ purposes 'ill
&ecome increasingl+ separate 9deferred ta$es:.
!"en small and medium;sied &usinesses 'ill not
&e a&le to a"oid international financial reporting 9in
t%e medium to long term:.
G8
Fin.St.
-nternational financial reportin# will not "e retricted to conolidated financial tatement$ -ndividual
financial tatement will alo "e affected$
Standardi+ation! wor0 implification
-ndividual financial tatement mut "e pu"lihed for litin# on the new mar0et! in line with -AS or
/S GAAP$
Pro"lem' .%ualit) of treatment in financial tatement and ta* "alance heet 1ta* aement "ai
would "e hi#her or lower2
7inancial tatement and ta* "alance heet will "ecome increain#l) eparate 1deferred ta*e2$
Small- and medium-i+ed enterprie will "e una"le to avoid international financial reportin#
1re%uirement of "an0! upervior) "oard! and o on2$
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#ifferences in Financial Reporting
German 8a' U.S. GAAP . IAS
Prudence Concept
Realiation Principle
Imparit+ Principle
Ac0uisition <alue Principle
,asis for Single <aluation
!0ualit+ of Treatment Principle
Continuit+ Principle
Fair Presentation
Su&stance o"er Form
1atc%ing Principle
1aterialit+ Principle
Consistenc+ Principle
Going Concern
. Periodicit+
Going Concern
. Periodicit+
,asic Principle
Su&se0uent
Principles
Premises
7air preentation' All information relevant to the true and fair preentation of the economic ituation
mut "e prepared and preented clearl)
Su"tance over form' An aement "aed on economic realit) rather than le#al form
6atchin# principle' Principle of matchin# e*pene where") e*pene are reali+ed in the period
when aociated revenue are reco#ni+ed 1P4C - percenta#e of completion2$
6aterialit)' 7inancial tatement mut provide hareholder with information relevant to their
deciion on whether to "u) or ell 1note for hidden reerve2$
Conitenc) principle' :rea0 in conitenc) are permitted onl) if the information conve)ed in the
tatement i improved a a reult
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SAP AG 2003
Compara&le financial statements are &ecoming
increasingl+ important to international capital and
sales mar/ets. An !U strateg+ document stipulates
t%at IAS financial statements 'ill &e o&ligator+ for
certain companies from 4556.4557.
Since t%is trend is una"oida&le and indi"idual financial
statements form t%e &asis for consolidated financial
statements* all financial statements 'ill soon &ecome
internationalied.
("er"ie' of Trends
SAP AG AC206 2-10