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New Developments in Management Reporting – The Modernisation of the Annual Report

Published online by Cambridge University Press:  06 March 2019

Regine Buchheim  and
Kati Beiersdorf

Extract

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In Germany, the management report that comments on the company's business and financial position as well as its future prospects has long ago been introduced to the Handelsgesetzbuch (HGB – German Commercial Law). Ever since the European Court of Justice [ECJ] has clarified that GmbH & Co. KGs are classified as companies with limited liabilities under the 4th and 7th Directive, annual reports have to be published by an even wider range of companies.

Type
Articles
Information
German Law Journal , Volume 6 , Issue 5 , 01 May 2005 , pp. 861 - 868
Copyright
Copyright © 2005 by German Law Journal GbR 

References

1 GmbH & Co. KG is a limited partnership where all of the fully liable members are constituted ad private limited liability companies.Google Scholar

2 The German terminology usually refers only to Lageberichterstattung, whereas there are several English translations. European Accounting Directives differentiate between annual reports and consolidated annual reports. Within National Laws and German Accounting Standards the term is translated into Management Report. Internationally still other terms with similar meanings have emerged. This includes Management Discussion and Analysis (MD&A) or Management Commentary.Google Scholar

3 See Directive 2003/52/EC of 18 June 2003 (Modernisation Directive).Google Scholar

4 Article 46 (1) and (2) of the Fourth Council Directive (78/660/EEC) and Article 36 (2) of the Seventh Council Directive (83/349/EEC), last amended by Directive 2003/51/EC, OJ No. L 178, 17.7.2003, p. 16.Google Scholar

5 The German Bilanzrechtsreformgesetz was enacted on 4 December 2004.Google Scholar

6 See Modernisation Directive, Reasoning (9) and explanatory statement for BilReG, 23 – 24.Google Scholar

7 See Bmj, explanatory statement for BilReG, 24.Google Scholar

8 GAS 15.38 and 15.94 – 98.Google Scholar

9 See IAS 32.51 – 32.85. See www.iasb.org/current/ed.asp for the recent status of the Exposure Draft Financial Instruments: Disclosures (ED 7).Google Scholar

10 See GAS 15.67 – 68.Google Scholar

11 See Bmj, explanatory statement for BilReG, 25.Google Scholar

12 See GAS 15.31 – 32 and 15.111 – 119.Google Scholar

13 See Hans-Böckler-Stiftung, Qualität der Lageberichterstattung von Kapitalgesellschaften in Deutschland unter besonderer Berücksichtigung der Darstellung von Risiken der künftigen Entwicklung (2004); Karlheinz Küting and Christian Zwirner, Ergebnisse einer mehrjährigen empirischen Analyse der Informationsqualität deutscher Geschäftsberichte, 5 Steuern und Bilanzen 193 – 200 (2003); Karlheinz Küting and Matthias Heiden, Zur Informationsqualität der Lageberichterstattung in deutschen Geschäftsberichten – Branchenangaben, Risikobericht, Prognosebericht, 19 Steuern und Bilanzen 933 – 937 (2002).Google Scholar

14 See GAS 15.34Google Scholar

15 See IASB MD&A – Research Group; Research Group Findings as presented at IASB meeting February 2005, Preliminary Views: (f); Canadian Performance Reporting Board, Management's Discussion and Analysis – Guidance on Preparation and Disclosure (2004), par. 240.1, 310.1 and 320; Accounting Standard Board (ASB), Exposure Draft of a Reporting Standard (RED 1) on the Operating and Financial Review (2004), par. 28 – 40.Google Scholar

16 See Modernisation Directive, Article 1 No. 14 amending Article 46 of the 4th Directive and Article 2 No. 10 amending Article 36 of the 7th Directive.Google Scholar

17 See Directive 2004/109/EC of 15 December 2004 on the harmonisation of transparency requirement (Transparency Directive). Official Journal of the European Union L 390/38 of 31 December 2004.Google Scholar

18 The requirements include issuers of shares and issuers of debt securities. Already in 1999 the Commission communicated an “Action Plan” which stressed the need to upgrade transparency requirements. See European Commission, Implementing the framework for financial markets: Action Plan (1999).Google Scholar

19 See Buchheim, Regine and Ulbrich, Philipp, EU-Transparenz-Richtlinie: Neuregelung der periodischen und laufenden Berichterstattung kapitalmarktnotierter Unternehmen, Kapitalmarktorientierte Rechnungslegung (KoR) 273, 287 (2004).Google Scholar

20 In contrast to the 4th and 7th Accounting Directives the Transparency Directive refers to Management Reporting rather than Annual Reporting.Google Scholar

21 See Article 5 No. 4 of the Transparency Directive.Google Scholar

22 Until now only issuers of shares are covered by national regulations See Börsengesetz (BörsG) § 40 Zwischenberichterstattung (Interim Financial Reporting). For further information about the impact of the Transparency Directive see Burger, Anton, Ulbrich, Philipp and Luce, Karsten, Kapitalmarktorientierte Rechnungslegung und Konsolidierungspflicht der Sparkassen, Betriebswirtschaftliche Blätter 96, 105 (2005).Google Scholar

23 See www.iasb.org/meetings/iasb_observernotes.asp for Observer Notes of the IASB meeting in February 2005 and the current status of that project.Google Scholar

24 According to the Accounting Directives and the HGB, small companies with limited liability are exempted from the preparation of an annual report.Google Scholar