The History of Accounting in Germany - Transposition of Accounting Directives

The codification of German accounts dates back to the 18th century. In 1945 it was already twofold, distinguishing between rules for public limited companies and rules applicable to other commercial companies. There had been little change in accounting until 1959. Major changes were introduced only with the new Companies Act 1965. Four years before the German reunification, with the 19th The Accounting Directives Act (BiRiLiG), published on December 1985, transposed the Fourth European Council Directive 78/660/EEC on individual accounts and the Seventh European Council Directive 83/349/EEC on consolidated accounts in 1986 in West Germany (‘the Federal Republic of Germany’). The contribution first analyses the first application of the Member States’ election rights for the individual financial statements. In terms of approach and assessment, the German legislator could choose between more progressive or more conservative alternatives (CP score). As regards presentation and disclosure, there was a choice between informative or restrictive implementation (RI rating). Many amendments to the European Directive(s) took place after 1986. They triggered several laws transposing the Commercial Code. This has also led to adjustments over the years to the accounting rules for individual financial statements of corporations in West Germany. A separate part explains the accounts in East Germany (“German Democratic Republic”) until reunification in 1990. The results for each year, summarised in CP and RI scores, can be presented graphically in a diagram. The most striking change is the change in the system towards more progressive accounting in 2009. In general, large reductions are granted to medium-sized and small enterprises, so that accounting is considered to be predominantly restrictive. Forthcoming as a book chapter. The codification of the German accounting system has a history going back to the 18th century. In 1945, it was what is already bipartite, differentiating between rules for stock corporations and rules for other commercial undertakings. Accounting legislation did not change much until 1959. More changes came with the redesigned Aktiengesetz 1965. Four years before German reunification, with the so-called’ Bilanzrichtliniegesetz (BiRiLiG) published on 19th December 1985, the transposition of the Fourth Council Directive 78/660/EEC on single accounts and of the Seventh Council Directive 83/349/EEC on consolidated accounts taken place in 1986 in West Germany. The paper analyses the initial application of member state options contained in the directive on single accounts. Regarding recognition and measurement, the choice of German legislators could be progressive or conservative (CP score). Regarding presentation and disclosures, there was a choice between more informative or more restrictive (RI score). After 1986, many amendments taken place. They responded to several legal German acts relevant for accounting in the ‘Commercial Code’. Over the years, this result in a shift in the German accounting system for single accounts. A separate part explains the accounting in East Germany until reunification in 1990. The results summarised in CP scores and RI scores over the year are displayed in a diagram. Must noticeable, the system made a major change to more progressive accounting in 2009. In general, there are extensive relief provisions for medium-sized and small companies, making the disclosures mainly restrictive.