1.2 Accounting Standards

1. US-GAAP (Generally Accepted Accounting Principles US)

2. IFRS (International Finnancial Reporting Standards)

3. HGB (Handelsgesetzbuch)

• each country - own distinct accounting standards

• Firms in different countries = different standards in financial reports

• = impeding comparison

• represents the set of accounting rules that must be applied by firms in most countries (outside the US) for informal purposes

• EU adopted IFRS in 2005

• The standards are prepare by a private body (“IABS“) located in London

1. Information about the company’s financial situation (IFRS or US-GAAP)

2. Determination of the profit distributable to shareholders (local “GAAP“ e.g. Germany = HGB)

3. Determination of tax payments(Local “Tax GAAP“ e.g. Germany = Einkommensteuergesetz EStG)

= A company might report three different profits