Accounting
Abstract
The observance of international accounting standards is playing an increasingly significant role in dynamic regulatory developments and presents several challenges, which may necessitate a variety of procedural and technical data processing changes.
Regulatory consolidation under the influence of international accounting standards
The observance of international accounting standards is playing an increasingly significant role in dynamic regulatory developments. On the one hand, publicly listed parent institutions must conform to the new requirement for a financial data report based on an IFRS balance sheet (Financial Reporting, FINREP). This financial data report should be implemented by 1 January 2013 in accordance with the provisions of the new EU CRR Regulation. On the other hand, as part of the implementation of the Banking and Credit Adequacy Directives1, § 10a (7) of the German Banking Act (KWG) obliges all parent institutions to use consolidated accounts as the basis for determining their own funds and risk exposure for the purpose of solvency reporting (Common Reporting Framework, COREP)2. Current legislation requires groups of institutions to create both the FINREP and COREP reports with the regulatory consolidation group set out as per §10a of the KWG. As well as the problem of differing consolidation groups between the IFRS and the KWG, consideration should also be given to the different consolidation techniques used in the conversion of group institution reports based on IFRS-consolidated accounts. What follows is an overview of the differences between groups of consolidated companies under regulatory provisions and commercial law. As the consolidation group outlined in the German Commercial Code (HGB) largely matches that outlined by the IFRS in the wake of the changes made to the HGB in the German Accounting Law Modernisation Act (BilMoG), the provisions below will only be considered in further detail in accordance with the IFRS. This
The observance of international accounting standards is playing an increasingly significant role in dynamic regulatory developments and presents several challenges, which may necessitate a variety of procedural and technical data processing changes.
Regulatory consolidation under the influence of international accounting standards
The observance of international accounting standards is playing an increasingly significant role in dynamic regulatory developments. On the one hand, publicly listed parent institutions must conform to the new requirement for a financial data report based on an IFRS balance sheet (Financial Reporting, FINREP). This financial data report should be implemented by 1 January 2013 in accordance with the provisions of the new EU CRR Regulation. On the other hand, as part of the implementation of the Banking and Credit Adequacy Directives1, § 10a (7) of the German Banking Act (KWG) obliges all parent institutions to use consolidated accounts as the basis for determining their own funds and risk exposure for the purpose of solvency reporting (Common Reporting Framework, COREP)2. Current legislation requires groups of institutions to create both the FINREP and COREP reports with the regulatory consolidation group set out as per §10a of the KWG. As well as the problem of differing consolidation groups between the IFRS and the KWG, consideration should also be given to the different consolidation techniques used in the conversion of group institution reports based on IFRS-consolidated accounts. What follows is an overview of the differences between groups of consolidated companies under regulatory provisions and commercial law. As the consolidation group outlined in the German Commercial Code (HGB) largely matches that outlined by the IFRS in the wake of the changes made to the HGB in the German Accounting Law Modernisation Act (BilMoG), the provisions below will only be considered in further detail in accordance with the IFRS. This