German Accounting Standards Board

In 1999 the German Accounting Standards Board (GASB) has been implemented following the model of the US Financial Accounting Standards Board FASB.

The GASB has been mandated to develop principles for financial reporting in consolidated financial statements, to advise the German Parliament on current developments in financial reporting and to represent the Federal Republic of Germany on international accountancy bodies. It has seven members appointed by the administrative council of the German Accounting Standards Committee (GASC) as independent experts with proven expertise in the areas of national and international financial reporting.

The GASB released several German Accounting Standards (GAS) that either supplement or interpret the existing accounting law. The GAS reduce a number of alternative accounting treatments provided by accounting law, for example related to purchase accounting (GAS No. 4). The GASB implemented accounting standards that are clearly internationally orientated but were uncommon to the traditional accounting practice in Germany such as presentation of a Cash Flow Statement (GAS No. 2), Segment Reporting (GAS No. 3), Quarterly Reporting (GAS No. 6), Presentation of a Statement of Changes in Equity (GAS No. 7) or detailed disclosure of related party transactions (GAS No. 11).

The GAS are presumed to represent proper accounting principles for consolidated financial reporting but importance of GAS is lower than the provisions of the accounting law itself. The German Institute of Certified Auditors IDW has stated in its Audit Standard PS 450 section 112a, that there is no reason to qualify the auditors opinion in case that a company uses an optional accounting treatment provided by law that is prohibited by GAS. In this case the auditor has to report this deviation within the long-form report (that is not published) but not in the auditors opinion itself. Nevertheless, it has to be observed that some of the recommendations of the GASB have already been implemented in the accounting law and are therefore mandatory.

Further development of accounting standards in Germany will be heavily influenced by the EU regulation on the application of IFRS that require adoption and use of IFRS for consolidated financial statements of capital market orientated companies since 2005.

Our accountants and tax advisers are based in Munich/Germany. If you have any questions please feel free to send a message: