Germany. German accounting and IFRS: Limitations in the convergence potential of German national accounting standards towards international accounting standards

Abstract

Although several reforms of the German statutory accounting system in the last decades led to a moderate but ongoing harmonization with international accounting standards, there still remain significant-hence deliberate-differences between the two accounting systems. These differences mainly result from fundamental disparities in the underlying purposes and principles of accounting according to the German Commercial Code vs. IFRS. The article provides an overview of the current status of internationalization of German statutory accounting as well as the application and importance of German statutory accounting and of IFRS in Germany. Second, it aims to show the main obstacles for a further internationalization of German accounting standards by comparing the main purposes of the German and the IFRS accounting systems and by explaining some central characteristic principles of the German accounting system, which either do not exist or have a substantially different interpretation in the IFRS.