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German Corporate Governance in International and European Context pp 329–400Cite as

Accounting as the Documentary Proof of Good Corporate Governance

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Abstract

Accounting is a legal duty, no marketing show. The responsible corporate directors and their accountants and auditors, however, should see financial reporting much more as an entrepreneurial opportunity. Giving ‘a true and fair view’ of the company every fiscal year in the accounts means a safeguard against sanctions and liability claims: the best evidence of sound business practice, opening up potential investment opportunities. Telling the investors the whole story (the good, the bad, and the ugly) creates confidence in the light of substance and sustainability, even in a year of minor success. Such corporate governance is necessary for the success of a company in the longer term and for the integrity of capital markets worldwide.

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Notes

  1. 1.

    Publications in German e.g. Luttermann (1998) and Luttermann (1999a). See also below in footnote 3 and in Sects. 9.2.2, 9.2.3.

  2. 2.

    See below Sect. 7.5.1 and Chap. 9.

  3. 3.

    Luttermann (1997), pp. 485–506. Apart from the works cited in footnote 1, see also in footnotes 5 to 7 and, e.g., Luttermann (2004), pp. 18–30; Luttermann (2006), pp. 778–786. Similarly Arthur Levitt, The ‘Numbers Game’ (see below Sect. 7.5.1).

  4. 4.

    du Plessis et al. (2007), pp. 177–204 (Chapter 7).

  5. 5.

    Luttermann (2015a), pp. 31–48.

  6. 6.

    Luttermann (2015c), pp. 274–282.

  7. 7.

    Luttermann (2016), pp. 397–405.

  8. 8.

    von Savigny (1840), pp. 85, 236, 239.

  9. 9.

    In Dartmouth College v Woodward, 4 Wheat. 518, 636 (1819); 17 U.S. 518, 636 (1819).

  10. 10.

    Brandeis (1914).

  11. 11.

    Mattessich (1995), pp. 15–40; Luttermann (1996b), pp. 595–626.

  12. 12.

    Directive 2013/34/EU, 26.6.2013, on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC and repealing Council Directives 78/660/EEC and 83/349/EEC, OJ of 29.6.2013, L 182/19. See on the—corresponding—old law in the 2nd ed., p. 279. About sanctions see Sects. 7.8.4–7.8.5. Directive 2014/95/EU, 22.10.2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, OJ L 330, 15.11.2014, 1.

  13. 13.

    Overall: Directive 2013/34/EU, recital (40). See Sect. 7.3.3 and Chap. 9.

  14. 14.

    See also Sects. 8.5.1 and 9.8.2. Overall Claus Luttermann in Kropff and Semler (2003) vol 5/1 (S 245 HGB), pp. 452–468.

  15. 15.

    Basically on the German Signaturgesetz (amended by Art. 4 Abs. 111 G v. 7.8.2013 I 3154) see Großfeld and Luttermann (2005), paras 221–29. For electronic disclosure see <www.unternehmensregister.de>.

  16. 16.

    See Sects. 7.4 and 7.8.4–7.8.5. Directive 2001/34/EC Art 4(2)(c), 5(2)(c); cf. Transparenzrichtlinie-Umsetzungsgesetz (German Act of Transfer on the Harmonisation of Transparency Requirements) Art 5 (reforming HGB Ss 264(2), 289(1), 297(2), 315(1)) and US Sarbanes-Oxley Act 2002, S 302.

  17. 17.

    See below Sect. 7.5.1. Luttermann (2011c), p. 330.

  18. 18.

    See Sects. 7.3.1 and 7.4. Cf. Article 1(1) Directive 2004/109/EC, 15.12.2004, on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, OJ 31.12.2004, L 390/38.

  19. 19.

    See Sect. 7.3.6. Großfeld and Luttermann (2005) paras 7–26.

  20. 20.

    Treaty on European Union, Art 3 No. 3. Treaty on the Functioning of the European Union (TFEU), Art 26.

  21. 21.

    TFEU Art 50(2)(g) and 54 (ex-EC Treaty, Art 44(2)(g) and 48).

  22. 22.

    Legal basis: TFEU Art 288(3); ex-EC Treaty Art 249(3).

  23. 23.

    On the preparation of the reform already in the 2nd ed, p. 281 (footnote 27); there also references on the earlier legal foundations.

  24. 24.

    Amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, OJ of 29.6.2013, L 182/19. Overview: Luttermann (2013), pp. 1128–1133. See also below Sects. 7.4.5 and 7.8.3.

  25. 25.

    Directive 2013/34/EU, recital (55).

  26. 26.

    Directive 2013/34/EU, recital (3).

  27. 27.

    Ibid.

  28. 28.

    Directive 2013/34/EU, recital (4).

  29. 29.

    On the application of international accounting standards see (2002) OJ L 243/1 (also called: ‘IAS Regulation’. Legal basis for the regulation (Verordnung) is Art 288(2) TFEU (= ex-Art 249(2) EC Treaty). See Großfeld and Luttermann (2005) paras 146–68.

  30. 30.

    See in detail Sects. 7.3.3 and 7.3.5.

  31. 31.

    European Commission, Evaluation of Regulation (EC) No 1606/2002, COM(2015) 301 final, 18.6.2015, p. 10 (No 4.); on this: Commission Staff Working Document, SWD(2015) 120 final.

  32. 32.

    According to Directive 2013/34/EU, Art. 52: (1) Directives 78/660/EEC and 83/349/EEC are repealed. (2) References to the repealed Directives shall be construed as references to this Directive and shall be read in accordance with the correlation table in Annex VII.

  33. 33.

    Resolution of 6 October 2016 on IFRS 9 (2016/2898(RSP)), I.5.: “recalls the Maystadt recommendations regarding the expansion of the ‘public good’ criterion, i.e. that accounting standards should neither jeopardise financial stability in the EU nor hinder the EU's economic development”. Seminally Luttermann (2011a), pp. 346, 354.

  34. 34.

    International Accounting Standards Committee Foundation, renamed: ‘IFRS Foundation’, a not-for-profit corporation under the General Corporation Law of the State of Delaware (USA).

  35. 35.

    European Parliament (EP), A6-0032/2008 (Radwan Report), No 8.

  36. 36.

    EP, A6-0032/2008 (Radwan Report), No 2.

  37. 37.

    EP non-legislative resolution (INI/2006/2248: 24/04/2008; see: <www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P6-TA-2008-0183&language=EN>).

  38. 38.

    See Sects. 7.7.6, 7.9.2 and the IASB/IFRS Foundation on governance enhancements: <www.ifrs.org>.

  39. 39.

    Basically: ECON, Report on the EU role in the framework of international financial, monetary and regulatory institutions and bodies (2015/2060 (INI)), 17.3.2016 (so-called ‘Goulard Report’). Cf. Crawford et al. (2014), pp. 304–318.

  40. 40.

    ESMA, Guidelines on enforcement of financial information, 2014/1293. Cf. ESMA, Guidelines on Alternative Performance Measures, 2015/1415. Homepage: www.esma.europa.eu.

  41. 41.

    Philippe Maystadt, Should IFRS-Standards be more ‘European’? – Mission to reinforce the EU’s contribution to the development of international accounting standards, October 2013.

  42. 42.

    Basically below Sect. 7.4.3. See e.g. Amisi (2013); Bamber and McMeeking (2016), pp. 59–73; Crawford et al. (2016), pp. 43–64; Masatsugu Sanada, Legitimacy of Global Accounting Standards: A New Analytical Framework, <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1990796> (23.1.2012). Raffournier (2014), pp. 281, 294–298.

  43. 43.

    Wingard et al. (2016), pp. 134–156; see also below Sect. 7.10.3. Cf. on multi-functionaries (‘shadow elite’) under Sects. 9.5.3 and 9.6.3.

  44. 44.

    TEU Art 5(1) and Accounting Law Directive 2013/34/EU, recital (1).

  45. 45.

    TFEU Art 288(2)(2) (ex-EC Treaty, Art 249).

  46. 46.

    Accounting Law Regulation (EC) 1606/2002, Art 4; S 315a HGB. Effective (April 2011): Commission Reg (EU) No 149/2011 of 18 February 2011 amending Reg (EC) No 1126/2008 adopting certain international accounting standards in accordance with Reg (EC) 1606/2002, OJ L 46, 19.2.2011, p. 1. Implementation of the IAS Regulation (1606/2002) in the EU and EEA (25.2.2008: <ec.europa.eu/internal_market/accounting/docs/ias/ias-use-of-options_en.pdf>).

  47. 47.

    On the current state: <http://ec.europa.eu/finance/company-reporting/ifrs-financial-statements/index_en.htm>.

  48. 48.

    IAS 39 (2004) paras 9b, 35 and 81A: fair value option and hedge accounting. See Commission Reg (EC) No 1864/2005 of 15.11.2005 (resolving the fair value option carve-out). IAS with highlighted carve-out as of 1.1.2008: <http://ec.europa.eu/internal_market/accounting/docs/ias/ias_39_carve-out.pdf>.

  49. 49.

    See Sects. 7.7.1 and 7.7.3. Cf. IFRS 9 (Financial Instruments), effective date in the EU: 1.1.2018, Accounting Regulatory Committee (ARC, 27.6.2016). On IAS 39 revision: http://ec.europa.eu/internal_market/accounting/ias/revision_en.htm. Cf. Commission Regs (EU) No 1374/2013 (IAS 36) and 1375/2013 (IAS 39) of 19.12.2013.

  50. 50.

    Accounting Law Regulation (EC) 1606/2002 Art 5. Overview of the use of the options provided in that Regulation: <http://ec.europa.eu/internal_market/accounting/docs/legal_framework/20140718-ias-use-of-options_en.pdf> (Dec. 2013).

  51. 51.

    Ss 315a(3) and 325(2a) HGB.

  52. 52.

    Einkommensteuergesetz (German Income Tax Code) S 5(1) with Körperschaftsteuergesetz (German Corporation Tax Code) S 8(1).

  53. 53.

    Deutscher Bundestag to the Bilanzrechtsreformgesetz, Bundestags-Drucksache 15/3419, 24 June 2004, 23–24 (argumentation of the bill).

  54. 54.

    European Court of Justice, cases DE+ES Bauunternehmung GmbH (1999) ECR I-5331, and BIAO (2003) ECR I-1. See Großfeld and Luttermann (2005) para 300, 313–16.

  55. 55.

    Luttermann (2011a), pp. 346–355.

  56. 56.

    TFEU Art 288(2) and (3); ex-EC Treaty, Art 249(2) and (3).

  57. 57.

    Comments concerning certain Articles of the Reg (EC) 1606/2002 (Nov 2003) 10–12.

  58. 58.

    Also called ‘IAS/IFRS Regulation’.

  59. 59.

    See particularly in Germany Ss 315a and 316–335b HGB.

  60. 60.

    Accounting Law Directive 2013/34/EU Art 20(1). Cf. previously: Directive 2006/46/ECC (2006) OJ L 224/1, Art 1.7. (Amendment to Dir 78/660/EEC, Art 46a).

  61. 61.

    On this Directive 2014/95/EU, 22.10.2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, OJ L 330, 15.11.2014, 1. About liability see Sect. 7.8.4.

  62. 62.

    Accounting Law Directive 2013/34/EU Art 20 (cf. Directive 78/660/EEC, new Art 46a(f)).

  63. 63.

    For sanctions, see below Sect. 7.8.5. Regarding non-financial key performance indicators (e.g., information relating to environmental and employee matters), see Accounting Law Directive 2013/34/EU, Art 19(1)(3).

  64. 64.

    Directive 2006/46/ECC, see the fourth recital in the preamble. Cf. Accounting Law Directive 2013/34/EU, Art 19(1)(1) with Art 20(1)(1); see also, ibid., recitals (26) and (42).

  65. 65.

    See, for example, Bormann (1996), p. 35; Großfeld and Luttermann (2005) paras 169–72.

  66. 66.

    Wall Street Journal Europe, 15.3.1995, 1.

  67. 67.

    Wall Street Journal Europe, 22.2.2000, 4.

  68. 68.

    See also Sect. 7.7 and Chap. 9 (esp. Sect. 9.2.1).

  69. 69.

    Accounting Law Directive 2013/34/EU, Art 4(3), 19(1) and 24(1), recitals (9), (26), (42) and (43).

  70. 70.

    More recently e.g. Etihad Etisalat Co. (Saudi Arabia), Penn West Petroleum Ltd. (Canada), Tesco (UK), Toshiba (Japan), Zhengzhou Siwei (China). Cf. Cornerstone Research, Accounting Class Action Filings and Settlements, 2014. SEC on Financial and Accounting Fraud Cases: <www.sec.gov/News/Speech/Detail/Speech/1370539845772> (enforcement, 19.9.2013) <www.sec.gov/news/pressrelease/2016-74.html> (Logitech, Ener1, 19.4.2016).

  71. 71.

    Spengler (1990), p. 77.

  72. 72.

    Luttermann (1999a). Großfeld and Luttermann (2005) paras 86–110. On reforms Luttermann and Luttermann (2004), pp. 1002–1010; Luttermann K (2011), pp. 25–38 <http://download2.hermes.asb.dk/archive/2011/Hermes46.html>.

  73. 73.

    TFEU Art. 267(1)(a) and (b); ex-EC Treaty, Art 234(1)(a) and (b).

  74. 74.

    See Sects. 7.3.3 and 7.8.1.

  75. 75.

    TFEU Art. 267(2) and (3); ex-EC Treaty, Art 234(2) and (3).

  76. 76.

    See also Directive 78/660/EEC, fourth recital in the preamble. This is also the case for the application of IFRS in the European Union according to Art 3(2) of the Accounting Law Regulation (EC) 1606/2002; see above Sect. 7.3.4.

  77. 77.

    Case C-234/94 Tomberger (1996) ECR I-3133, para 17; Case C-275/97 DE + ES Bauunternehmung GmbH (1999) ECR I-5331, para 26; Case C-306/99 BIAO (2003) ECR I-1, paras 72–76.

  78. 78.

    ECJ, Case C-322/12 Gimle (2013) ECLI:EU:C:2013:632 (ZIP 2014, 166) para 30; Case C-510/12 Bloomsbury (2014) ECLI:EU:C:2014:154, para 18.

  79. 79.

    For details of the relationship to the German text, see Claus Luttermann, in Kropff and Semler (2003) vol 5/1, S 264 HGB, 774 paras 34–36 and paras 83–105 (ECJ rulings).

  80. 80.

    European Court of Justice, Case C-234/94 Tomberger (1996) ECR I-3133, para 17; Case C-275/97 DE+ES Bauunternehmung GmbH (1999) ECR I-5331, para 26; Case C-306/99 BIAO (2003) ECR I-1, paras 72–76.

  81. 81.

    See for example European Court of Justice, Case 236/97 Codan (1998) ECR I-8679. Luttermann (1999d), p. 401.

  82. 82.

    See below Sects. 7.5.3–7.5.5.

  83. 83.

    See Claus Luttermann, in Kropff and Semler (2003) vol 5/1, S 264 HGB paras 19–21 and 121–28.

  84. 84.

    See ibid. p. 787 paras 83–105; Parker and Nobes (1994).

  85. 85.

    Previously: Directive 78/660/EEC Art 2(3). In Germany: S 264(2)(1) HGB.

  86. 86.

    Case C-275/97 DE + ES Bauunternehmung GmbH (1999) ECR I-5331, paras 26 and 27; Case C-306/99 BIAO (2003) ECR I-1, para 72.

  87. 87.

    Accounting Law Directive 2013/14/EU Art 4 (ex-Directive 83/349/EEC Art 16(3)); S 297(2)(2) HGB.

  88. 88.

    See Accounting Law Directive 2013/34/EU Art 6(1)(h), 43(4) and recital (16).

  89. 89.

    See also Art 2 No 16 and recital (17). Luttermann (2008b), pp. 577–583.

  90. 90.

    See Sects. 7.4.5, 8.6 and 9.4; c.f., S 264(1) and (2)(1) HGB, S 276 BGB. On ‘audit materiality’ see Sect. 7.8.1.

  91. 91.

    Cf. above Sect. 7.3.5. See for example Nobes (2006), pp. 81, 85, referring to Arden (1993).

  92. 92.

    On German accounting principles (Grundsätze ordnungsmäßiger Buchführung—GoB) see Bundesfinanzhof (I 208/63), Bundessteuerblatt (BStBl) III 1967, 607. Luttermann (1996b), p. 613.

  93. 93.

    See especially Sects. 7.5.3–7.5.5, and 7.9.2.

  94. 94.

    See above Sect. 7.3.4.

  95. 95.

    Claus Luttermann, in Kropff and Semler (2003) 306 paras 163 and 329 paras 250–51.

  96. 96.

    See Sects. 7.2, 7.3.6 and 7.6.2.

  97. 97.

    Claus Luttermann, in Kropff and Semler (2003) vol 5/1, 338 para 282, 343 para 299 and 414 paras 11–15; Großfeld and Luttermann (2005) paras 314, 62. Luttermann (2011a), pp. 346–355.

  98. 98.

    For the actual wording, see above Sect. 7.3.4. On the reform of the CF: Exposure Draft ED/2015/3 (May 2015). Zur Entwicklung unter: <www.ifrs.org> and <www.iasplus.com/en/projects/major/cf-iasb>.

  99. 99.

    Not explicitly adopted in the IASB Conceptual Framework for Financial Reporting (2010); see, e.g., QC12–16 (faithful representation).

  100. 100.

    For a discussion of the qualitative characteristics of accounts, see Großfeld and Luttermann (2005) paras 317–37.

  101. 101.

    Accounting Law Directive 2013/34/EU Art 4(2) (formerly: Directive 78/660/EEC Art 2(2)).

  102. 102.

    IASB CF.QC 30–32 and 12–16. Formerly: IASB F.25 and 46, IAS 1.13–22 (2003).

  103. 103.

    Accounting Law Directive 2013/34/EU Art 6(1)(a).

  104. 104.

    Accounting Law Directive 2013/34/EU Art 6(1)(d).

  105. 105.

    Accounting Law Directive 2013/34/EU Art 6(1)(e).

  106. 106.

    Accounting Law Directive 2013/34/EU Art 6(1)(f).

  107. 107.

    Accounting Law Directive 2013/34/EU Art 6(1)(g).

  108. 108.

    Ss 256, 240 HGB; c.f., Accounting Law Directive 2013/34/EU Art 6(1)(h) and (j).

  109. 109.

    Accounting Law Directive 2013/34/EU Art 6(1)(j) and Art 4(3); S 264(2)(1) HGB.

  110. 110.

    IASB Conceptual Framework for Financial Reporting (2010) QC1.

  111. 111.

    See IASB Framework 5 (1989/2001): qualitative characteristics are intended to ‘determine the usefulness of information in financial statements’. The ‘Introduction’ of the IASB Conceptual Framework (CF, 2010) under the heading ‘Scope’ simply speaks of: ‘(b) the qualitative characteristics of useful financial information’. See also aspects of the CF (OB1: ‘useful financial information’), OB2: ‘The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit.’ Cf., Staubus (1999).

  112. 112.

    IFRS Preface 10 (2010): Financial statements ‘are directed towards the common information needs of a wide range of users, for example, shareholders, creditors, employees and the public at large’.

  113. 113.

    IASB Conceptual Framework (2010) QC1 (cf. OB2).

  114. 114.

    IAS 1.9 (2003), sentence 2. IASB Conceptual Framework (2010) QC1: ‘for making decisions about the reporting entity on the basis of information in its financial report (financial information)’.

  115. 115.

    See IASB, CF 4.8 (cf. ED/2015/3, May 2015: 4.5–4.39). Cf. below Sects. 7.9.2 and 8.5.

  116. 116.

    Claus Luttermann, in Kropff and Semler (2003) vol 5/1, 295 paras 123–33; for further information about the ‘decision-usefulness concept’ see Ballwieser (2004), pp. 58–77. Empirical research: EFRAG/ICAS, Professional investors and the decision usefulness of financial reporting (March 2016).

  117. 117.

    IASB Conceptual Framework (2010) QC4 and QC12-16.

  118. 118.

    IAS 1.9 (2003), sentence 3.

  119. 119.

    BGH (I ZR 252/01), 2.10.2003 (2004) ZIP 184, 186 (regarding an investment, misleading sales promotion); see also Sect. 9.4.3. Compare to IASB Conceptual Framework (2010) QC 32.

  120. 120.

    BGH (I ZR 222/02), 16.12.2004 (2005) WRP 480, 483; Großfeld and Luttermann (2005) paras 97–99, 255–68 (Empfängerhorizont).

  121. 121.

    See Sects. 7.3.1 and 7.4.2; cf. also Sect. 8.6.1.

  122. 122.

    S 252(1) No 2 HGB; Accounting Law Directive 2013/34/EU Art 6(1)(a).

  123. 123.

    Specifically e.g. on payments according to Accounting Law Directive 2013/34/EU Art 48(2).

  124. 124.

    William C. Powers, Raymond S. Troubh, Herbert S. Winokur, Report of investigation by the special investigative committee of the board of directors of Enron Corp. 2002 WL 198018, at p. 4. See also Newby v Enron Corporation, 2002 WL 31854963 (S.D. Tex. Dec. 20, 2002).

  125. 125.

    See on the scope e.g. below in Sect. 7.5.2 (Lehman Brothers Inc.) as well as also SEC fraud charges on ITT Educational Services Inc. (concealing mounting failures in two off-balance-sheet student loan programs): <www.sec.gov/news/pressrelease/2015-86.html> (12.5.2015) and Form 8K File No. 001-13144 (CIK: 0000922475, 8.6.2016, in: EDGAR, under <www.sec.gov>).

  126. 126.

    Maydew (2005), pp. 283–290 (with further references). On ‘Enron’ Luttermann, Handelsblatt, 30.1.2002, 10.

  127. 127.

    See Accounting Law Directive 2013/34/EU Art 6(1)(h) and recital (16); cf. Sect. 7.4.3.

  128. 128.

    Luttermann (1998), pp. 330 et seq, 421 et seq and 528 et seq; Luttermann (2001), pp. 2433–2437 and Luttermann (2009c), pp. 1140–1141.

  129. 129.

    Cf. inter alia Directive 2006/46/ECC, 14.6.2006, OJ L 224/1 and Accounting Law Directive 2013/34/EU Articles 19, 20 and 41; see Sect. 7.3.8. This also applies to the rules of Directive 86/635/EC, 8.12.1986 on the annual accounts and consolidated accounts of banks and other financial institutions and the rules of Directive 91/674/EC, 19.12.1991, on the annual accounts and consolidated accounts of insurance undertakings.

  130. 130.

    Claus Luttermann, in Kropff and Semler (2003) vol 5/1, S 264 HGB, paras 207–213; Großfeld and Luttermann (2005) paras 266–6, 335–37, 1413 (group) and 1780 et seq (auditing).

  131. 131.

    S 76(1) AktG. Original text: ‘Der Vorstand hat unter eigener Verantwortung die Gesellschaft zu leiten.’ See below Sects. 9.1 and 9.4.

  132. 132.

    Ss 17–19 Insolvenzordnung (InsO—German Code of Insolvency). Luttermann and Geißler (2013), pp. 1381–1386.

  133. 133.

    Arthur Levitt, The ‘Numbers Game’ 28 Sept 1998, speech at NYU Center for Law and Business, <www.sec.gov/news/speech/speecharchive/1998/spch220.txt>. For examples see Großfeld and Luttermann (2005) e.g. paras 89–90, 647, 757–58, 1530–32, 1661–63.

  134. 134.

    Some examples are: Balsam AG, Bankgesellschaft Berlin AG, Flowtex AG, Comroad AG. See also, for example, BGH (1 StR 420/03), (2005) wistra 139 (s 400(1) No. 1 AktG); BGH (4 StR 364/96), (1996) wistra 348 (s 331 No 4 HGB, S 266 StGB); Oberlandesgericht Frankfurt (2 Ws 36/02, S 400(1) No 1 AktG), (2003) wistra 196; Finanzgericht München (7 K 499/96) (1998) EFG 1481. In more detail Luttermann (2012), pp. 251–258. See below in Sect. 7.9.2.

  135. 135.

    Report of A. Valukas, In re Lehman Brothers Holdings Inc., et al., Bankruptcy Court S.D.N.Y., Chapter 11 Case No. 08-13555 (03-11-2010).

  136. 136.

    See article by Craig Spector and Michael Corkery, The Wall Street Journal, 15.3.2010, 16–17 as well as 22.3.2010, 16–17. For further background information, see Jennifer Hughes, Accounting: Fooled again, Financial Times, 19.3.2010, 7. See also below Sect. 9.6.

  137. 137.

    See above Sect. 7.4.1 and Claus Luttermann, Handelsblatt, 30.1.2002, 10 (on the case of Enron Corp.). On the financial industry, see Chap. 8.

  138. 138.

    On public companies (from 2019) FASB, 25.2.2016: Accounting Standards Update (ASU) 2016-02, Leases (Topic 842); cf. IFRS 16 (Leases, 2016). Rachael King, 22.3.2016: total impact for all companies $2 trillion (<http://blogs.wsj.com/cio/2016/03/22/enterprise-tech-companies-hold-billions-in-off-balance-sheet-debt>). Cf. Albrecht et al. (2016), esp. Part 5 (Management Fraud). See also above Sect. 7.4.7.

  139. 139.

    For some comparative ‘numbers’, see Luttermann (1998), p. 25.

  140. 140.

    Case C-306/99 BIAO [2003] ECR I-1, para 75, regarding Art 31(1)(c) and 42(1) of the Fourth Directive 78/660/EEC.

  141. 141.

    Alexander (2006), pp. 65, 70. See on that Wüstemann and Kierzek (2006), pp. 92, 101, 102.

  142. 142.

    Nobes (2006), pp. 81, 84.

  143. 143.

    Directive 78/660/EEC Art 2(3) and (5), 20(1), 31(1)(c) [cf. Accounting Law Directive 2013/34/EU Art 4(3) and (4), Art 12(12)(1), Art 6(5)]. See German law: Ss 264(2)(1), 249(2), 252(1) No 3 HGB.

  144. 144.

    See above Sect. 7.4.2 and with more details European Court of Justice, Case C-275/97 DE+ES Bauunternehmung GmbH (1999) ECR I-5331, paras 24–40 (26). Luttermann (1999c), p. 1039.

  145. 145.

    Also so-called ‘principles’; see Sect. 7.4.3. In more detail Großfeld and Luttermann (2005) para 230.

  146. 146.

    The New Shorter Oxford English Dictionary (Vol 1 Clarendon Press, Oxford 1993) 460.

  147. 147.

    See Sects. 7.4 and 7.8.1.

  148. 148.

    European Court of Justice, Case C-275/97 DE + ES Bauunternehmung GmbH (1999) ECR I-5331, paras 28–40.

  149. 149.

    BGH, 14.12.1993 (VI ZR 221/92), (1994) NJW-RR 567, 568. Equally Bundesverfassungsgericht BVerfG), 18.1.2001 (1 BvR 1273/96), (2001) 54 NJW 1639, 1640. See in more detail for valuation Chap. 8.

  150. 150.

    See Claus Luttermann, in Kropff and Semler (2003) vol 5/1, 770 paras 19–21 and 799 paras 121–28.

  151. 151.

    Luttermann (2004), pp. 18–30.

  152. 152.

    See Großfeld and Luttermann (2005) paras 1229–1447 (general rules), paras 1448–1560 (HGB/European Law), and paras 1561–1730 (IAS/IFRS).

  153. 153.

    On the historical development Claus Luttermann, in Kropff and Semler (2003), vol 5/1, 291 paras 103–106.

  154. 154.

    Based on Article 24(7) Accounting Law Directive 2013/34/EU (ex-Art 26(1) Seventh Directive 83/349/EEC).

  155. 155.

    See especially Art 24(1) and (10)–(14) Accounting Law Directive 2013/34/EU (ex-Art 17 and 29 of the Seventh Directive 83/349/EEC).

  156. 156.

    Art 24(7) Accounting Law Directive 2013/34/EU (Seventh Dir 83/349/EEC Art 26(1)).

  157. 157.

    See Accounting Law Directive 2013/34/EU Art 24(2), (5) and (7). Cf. for details Großfeld and Luttermann (2005) paras 1448–1560.

  158. 158.

    S 315a HGB. Based on Art 4 of Accounting Law Reg (EC) 1606/2002.

  159. 159.

    For example: Daimler AG (delisting: 7.6.2010), Deutsche Bank AG, Fresenius Medical Care AG, Deutsche Telekom AG (delisting: 21.6.2010), Siemens AG (delisting: 15.5.2014), and SAP AG.

  160. 160.

    Details in Art 57 of the Einführungsgesetz zum (Introductory Act to the) HGB (EGHGB), based on Art 9 of Reg (EC) 1606/2002.

  161. 161.

    Commission Regulation (EU) No 1254/2012, OJ EU, 29.12.2012, L 360/1.

  162. 162.

    IFRS 10.5-9 (cf. formerly: IAS 27.12–21 (2003)). Likewise with the concept of ‘control’ consolidation pursuant to S 290(2) HGB.

  163. 163.

    IFRS 10.5-9 (cf. IAS 27.4 and—formerly—22 (2003)).

  164. 164.

    IAS 27.6 and 15 (2000).

  165. 165.

    Accounting Law Directive 2013/34/EU Art 24(7) (ex-Art 26(1) Seventh Dir 83/349/EEC).

  166. 166.

    Ibid. Cf. S 297(3)(1) HGB: ‘ein einziges Unternehmen’.

  167. 167.

    Rieckers (2004).

  168. 168.

    IAS 27.4 and 22 (2003). Cf. IFRS 10.1 and IN1-12 (2011).

  169. 169.

    Luttermann (1996a), pp. 935, 947.

  170. 170.

    Rickett and Grantham (1998). See for the German law 7.6.3.

  171. 171.

    See Einkommensteuergesetz (German Income Tax Code) S 1 and Körperschaftsteuergesetz (German Corporation Tax Code) S 1(1).

  172. 172.

    Sol Picciotto, Towards Unitary Taxation of Transnational Corporations, 9.12.2012 <www.taxjustice.net/cms/upload/pdf/Towards_Unitary_Taxation_1-1.pdf>. Luttermann (1994), pp. 489–493.

  173. 173.

    Luttermann (1996a), p. 935.

  174. 174.

    See for example Kuhr (2013); Joann M. Weiner, Formulary Apportionment and Group Taxation in the European Union: Insights from the United States and Canada (Working Paper, EU-Commission, March 2005—Doc. TAXUD/2005/2601—EN).

  175. 175.

    See Alex Barker and Arthur Beesley, Brussels’ €13bn tax bill clears way for further crackdowns on Apple, Financial Times, 31.8.2016, 1.

  176. 176.

    On this: <www.icij.org/project/luxembourg-leaks/luxembourg-leaks-stories-around-world>.

  177. 177.

    See EC, Proposal for a Council Directive, COM(2011)121/4 (2011/0058(CNS)). EP, Proposal for a Council Directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market, COM(2016)0026 (2016/0011(CNS)—Bayet-Report); EP, Tax policy in the EU: Issues and Challenges (EPRS, Cécile Remeur, Febr. 2015—PE 549.001).

  178. 178.

    Overall Luttermann (2016), pp. 397–405. Cf. EU Commission, Proposal for a Directive amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches, 12.4.2016 COM(2016) 198 final.

  179. 179.

    Ss 43(1) and 35(1) GmbHG read together. See also below Sect. 9.4.

  180. 180.

    BGH, 17.9.2001 (II ZR 178/99—Bremer Vulkan), BGHZ 149, 10 (I.1.). See Luttermann (2001), pp. 2433, 2435. Under criminal law BGH, 13.5.2004 (5 StR 73/03), BGHSt 49, 147.

  181. 181.

    Seminally BGH, 16.7.2007 (II ZR 3/04—Trihotel), BGHZ 173, 246. Luttermann (2008a), pp. 833–838; BGH, 15.9.2014 (II ZR 442/13) <https://openjur.de/u/771965.html>.

  182. 182.

    BGH, 28.4.2008 (II ZR 264/06—Gamma), BGHZ 176, 204 (= 2008 NZG 547) and 9.2.2009 (II ZR 292/07—Sanitary), BGHZ 179, 344 (= 2009 NZG 545).

  183. 183.

    Großfeld and Luttermann (2005), para 91. Luttermann (2009a), pp. 1–11. Christensen et al. (2009), pp. 1167–1199.

  184. 184.

    Luttermann (2015a), pp. 31–48. See also Sect. 7.9.2 and Chap. 8.

  185. 185.

    Bundesgesetzblatt (BGBl) I 1102 came into effect on 29 May 2009. On transitional regulations, see Zwirner and Künkele (2009), pp. 1081–1087. See also below Sects. 7.10 and 7.12.

  186. 186.

    Of 14.6.2006, OJ L 224/1 (so-called Abänderungsrichtlinie). Directive 2006/43/EC, 17.5.2006 is also implemented by this (so-called Abschlußprüferrichtlinie). See below Sect. 7.8.2.

  187. 187.

    BGBl I 1245.

  188. 188.

    Of 10.5.2016, BGBl I 2016; Regulation (EU) No 537/2014, 16.4.2014, on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC, OJ L 158/77. See below Sect. 7.8.2.

  189. 189.

    Deutscher Bundestag, Gesetzentwurf BilRUG, 20.2.2015, BT-Drs. 18/4050, p. 1.

  190. 190.

    Thus the explicit reasoning Begründung zum BilRUG, ibid., pp. 41, 42. Cf. above Sect. 7.4.3.

  191. 191.

    Ibid., Bundestags-Drucksache 18/4050, 42–45 (synopsis); Deutscher Bundestag, Rechtsausschuss zum BilRUG, 17.6.2015, Bundestags-Drucksache 18/5256; cf. legal basis: Accounting Law Directive 2013/34/EU Articles 15 to 20. Generally on the reform from a practical perspective, see e.g. Russ et al. (2015).

  192. 192.

    Explanation of the draft law of the German Federal government for the Accounting Law Modernisation Act (Bilanzrechtsmodernisierungsgesetz—BilMoG) of 30.7.2008, Bundestags-Drucksache 16/10067, 1. On the draft, see Luttermann (2008c), pp. 1605–1614.

  193. 193.

    Generally on the reform from a practical perspective, see e.g. Kessler et al. (2009).

  194. 194.

    See Großfeld and Luttermann (2005) paras 355–57, 359–61.

  195. 195.

    Cf. still the earlier S 248(2) HGB old version.

  196. 196.

    This corresponds to Annex III(C)(I)(1) of the Accounting Law Directive 2013/34/EU (cf. Council Dir 78/660/EEC), Art 9. Compare IAS 38 (Intangible Assets).

  197. 197.

    See Sects. 7.2 and 7.5.1. Cf. statistical evidence: European Commission, How do companies ‘perceive’ their intangibles? (2014/2016). IDW S 5 (Principles for the evaluation of intangible assets).

  198. 198.

    E.g., Garanina (2016), pp. 77–85; Triki-Damak and Halioui (2013), pp. 50–71.

  199. 199.

    On this, e.g., IDW RS-HFA 9; Schildbach (2010), pp. 69–75; Wolz et al. (2012), pp. 103–109. In legal comparison, Claus Luttermann, in Kropff and Semler (2003) vol 5/1, S 264 HGB 776 paras 42–82; Luttermann (2009a), pp. 1–11.

  200. 200.

    See Sect. 7.7.1 and Chap. 8. Cf. Kranz (2010).

  201. 201.

    Bundestags-Drucksache 16/10067, p. 32 (and 1), on the BilMoG.

  202. 202.

    Ibid.

  203. 203.

    See <www.ifrs.org/Current-Projects/IASB-Projects/Pages/IASB-Work-Plan.aspx> (15.9.2016).

  204. 204.

    IASB, IFRS for SMEs (2009), amendments 2015, see: <www.ifrs.org/ifrs-for-smes/pages/ifrs-for-smes.aspx>. Quagli and Paoloni (2012), pp. 147–156. Basically on IAS/IFRS for SMEs see Ebke et al. (2007). See European Commission, Proposal for a Directive on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, COM(2011) 684 final (2011/0308 (COD), 25.20.2011.

  205. 205.

    For more information see <https://ec.europa.eu/growth/smes_en>. Note also Sect. 7.10.3.

  206. 206.

    Deutscher Bundestag, Gesetzentwurf Bilanzrichtlinie-Umsetzungsgesetz—BilRUG, 20.2.2015, Bundestags-Drucksache 18/4050, 2 and 41.

  207. 207.

    Gesetz zur Modernisierung des Bilanzrechts (BilMoG—Draft), Bundestags-Drucksache 16/100667, S. 32. On this Luttermann (2008c). Specifically on accounting in family firms Reuther and Fink (2010), pp. 363–367.

  208. 208.

    Bundestags-Drucksache 16/10067, 33, on the draft of the IFRS for SMEs (February 2007). Seminally see Luttermann (2007a), pp. 47–65.

  209. 209.

    See Sects. 7.3.5 and 7.7.8.

  210. 210.

    Together with principles of realisation and of imparity in the accounting of ‘profit’, see Article 6(1)(c) of the Accounting Law Directive 2013/34/EU (Regulation 78/660/EEC Art. 31(1) lit. c) and S 252(1) No 4 HGB.

  211. 211.

    BilMoG, Bundestags-Drucksache 16/10067, p. 33.

  212. 212.

    Ibid.

  213. 213.

    See IASB on ‘converge with US GAAP’ under <www.ifrs.org>; FASB, Comparability in International Accounting Standards: <www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156304264>. Cf. e.g. Murphy et al. (2013), pp. 72–91.

  214. 214.

    SEC, Strategic Plan, Fiscal Years 2014–2018: Protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, 13–14.

  215. 215.

    Siegel (2007), pp. 95–111. Kritisch bereits: Luttermann (1999a).

  216. 216.

    Luttermann (2016), pp. 397–405.

  217. 217.

    Schön (2009). Stark (2007).

  218. 218.

    This is not seen, e.g., by Bräuer (2011), pp. 53–56.

  219. 219.

    IASB: About the IFRS for SMEs (<www.ifrs.org>) and Tweedie, Chairman IASB (Toronto, 25.4.2008): ‘IFRSs as a common financial reporting language throughout the world’. Cf. Sect. 7.10.3.

  220. 220.

    IFRS Foundation, The Global Financial Reporting Language (May 2016).

  221. 221.

    Luttermann (2009b), pp. 706–715. Cf. Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI Standards) and Global Islamic Finance Report, e.g. on Accounting and Reporting for Islamic Financial Transactions in Malaysia (2013, Chapter 10); Mohammed et al. (2015), pp. 418–424.

  222. 222.

    Nobes (2015). Cf., e.g., Asian-Oceanian Standard-Setters Group (aossg), Financial Reporting by Islamic Financial Institutions, March 2015; PwC, Open to comparison: Islamic finance and IFRS, 2010. Thani et al. (2015), pp. 17–26.

  223. 223.

    See External Reporting Board (XRB): New Zealand Equivalents to IFRS (NZ IFRS) and the new Accounting Standards Framework (<www.xrb.govt.nz>). On the Adoption of NZ IFRS (2007–2014): <www.treasury.govt.nz/publications/guidance/reporting/nzifrs> (29.5.2015).

  224. 224.

    See Luttermann (2007b), pp. 825–831. Cf. Haswell and Lanfield-Smith (2008), pp. 46–62. For developments see under: <www.aasb.gov.au>.

  225. 225.

    Australian Securities and Investments Commission Act 2001; see also S 224(b) and (c) ASIC Act 2001.

  226. 226.

    Luttermann (2014), pp. 777–784. SEC probes Alibaba accounting practices: <www.wsj.com/articles/alibaba-discloses-sec-probe-of-its-accounting-practices-1464195695> (25.5.2016).

  227. 227.

    Of 18.11.2015, see: <www.ifrs.org/Alerts/PressRelease/Documents/2015/2015_Beijing_Joint_Statement_final.pdf>; on this Paul Gillis, CAS and IFRS: <www.chinaaccountingblog.com/weblog/chinese-accounting-standard.html >. Cf. Moser (2014), pp. 56–66. On manipulation, e.g.: Tingting An, Case study on accounting fraud of U.S.-listed Chinese companies, MIT theses 2014; Francine McKenna, 20.6.2016: <www.marketwatch.com/story/after-china-fraud-boom-nasdaq-steps-up-scrutiny-of-shady-listings-2016-06-20>; see also under <www.china-briefing.com>: Inflicting loss on investors through cooked books: assessing accounting fraud in China (14.7.2016).

  228. 228.

    Note the new foreign investment law: Luttermann (2015b), pp. 185–192; on developments under: <www.mof.gov.cn>. Luttermann and Hartwig (2004), pp. 506–513.

  229. 229.

    Odia and Ogiedu (2013), pp. 389–399. See for India, e.g.: Pal (2015).

  230. 230.

    Accounting Standards Board of Japan (ASBJ), 25.7.2016: <www.asb.or.jp/asb/asb_e/endorsement/jmis/20160725.jsp>. Cf. relationship ASBJ/IASB: <www.asb.or.jp/asb/asb_e/asbj/pressrelease/pressrelease_20130510_e.pdf> (10.5.2013).

  231. 231.

    Japan Financial Services Agency (JFSA), Application of IFRS in Japan (13.2.2009), 7 et seq, and Regulatory Notices (March 2010). On the European Union see above Sect. 7.3.5.

  232. 232.

    JFSA, Application of IFRS in Japan (13.2.2009), 7 et seq, and Regulatory Notices (March 2010).

  233. 233.

    JFSA, Report of the Business Accounting Council on the use of IFRS in Japan, 20.6.2013, p. 4 (<www.fsa.go.jp/en/news/2013/20130621-1.html>). Cf. JFSA, IFRS Adoption Report, 15.4.2015 (<www.fsa.go.jp/en/news/2015/20150430-4/01.pdf>).

  234. 234.

    TFEU Art 3 No 3(4). On languages and the law in the EU see Luttermann K (2014), pp. 69–88.

  235. 235.

    Luttermann (1999b), pp. 115–123. Claus Luttermann in Kropff and Semler (2003) Vol 5/1: 300–302 (Einf BilanzR, paras 142–151) 776–815 (S 264 HGB, paras 42–169). Cf. above Sect. 7.4.2.

  236. 236.

    Cf. empirically Rachel Baskerville, Lisa Evans, The darkening glass: Issues for translation of IFRS, 2011. See also Luttermann and Wiese-Ptak (2015), pp. 461–473.

  237. 237.

    See Sects. 7.3.4, 7.4.2. Luttermann (2002), pp. 158–174.

  238. 238.

    EFRAG was set up in 2001 to assist the EC-Commission in the endorsement of IFRS (<www.efrag.org>). See also EC-Commission Summary Reports on: Review of the Accounting Directives (October 2009) and The IFRS for SMEs (May 2010).

  239. 239.

    Report of 28.5.2010 (<www.accountancyage.com/aa/news/1808000/ifrs-smes-incompatible-eu-directives-efrag>). Cf. IASB, May 2015: <www.ifrs.org/IFRS-for-SMEs/Documents/IFRS_for_SMEs_May_2015/2015_Amendments_IFRS_for_SMEs_Standard.pdf>.

  240. 240.

    OJ L 345, 31.12.2003, 64, amending Directive 2001/34/EC; Directive 2010/73/EU, 24.11.2010, amending Directive 2003/71/EC and Directive 2004/109 (transparency), OJ L 327, 11.12.2010, 1. Please note new amendments on this: Directive 2013/50/EU, 22.10.2013, OJ L 294, 6.11.2013, 13.

  241. 241.

    EC Commission, Draft Commission Reg, amending Commission Reg (EC) 809/2004 of 29 Apr 2004 implementing Directive 2003/71/EC of the EP and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements, Working Document ESC/23/2006–rev3. Commission Delegated Reg (EU) 2016/301, 30.11.2015, supplementing Directive 203/71/EC and amending Reg (EC) No 809/2004, OJ L 58, 4.3.2016, 13. On the implementation of financial services legislation OJ C 284 E 21 Nov 2002, 115 (Lamfalussy report).

  242. 242.

    CESR, Advice on the equivalence of Chinese, Japanese and US GAAPs (CESR/07-761, Dec 2007) and on Canadian and South Korean GAAPs (CESR/08-293, May 2011).

  243. 243.

    See UNCITRAL, Practice Guide on Cross-Border Insolvency Co-operation (2009) and Legislative Guide on Insolvency Law, Part Three: Treatment of enterprise groups in insolvency (pre release 21.7.2010; <www.uncitral.org>). For the European Union: Regulation (EC) No 1346/2000 of May 2000, OJ L 160, 30/06/2000, p. 1.

  244. 244.

    European Parliament (EP), non-legislative resolution (INI/2006/2248: 24/04/2008). IMF=International Monetary Fund, OECD=Organisation for Economic Co-operation and Development). On the OECD, see below Chap. 11.

  245. 245.

    Of 21.12.2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directive 2003/71/EC and 2004/109/EC, OJ L 340, 22.12.2007, 66. Commission Implementing Decision (EU) 2015/1612 of 23.9.2015 amending Decision 2008/961/EC on the use by third countries’ issuers of securities of certain third country’s national accounting standards and IFRS to prepare their consolidated financial statements, OJ L 249, 25.9.2015, 26. Cf. on Indian GAAP/IFRS: Commission, State of play of convergence, 23.9.2015, SWD(2015) 178 final.

  246. 246.

    22.4.2008, Report on convergence between IFRS and third country national GAAP and on the progress towards the elimination of reconciliation requirements that apply to Community issuers under the rules of these third countries.

  247. 247.

    4.6.2010, Report to the European Securities Committee and to the European Parliament on convergence between IFRS and third country national GAAPs: COM(2010)292 final (<http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52010DC0292.eu>).

  248. 248.

    On that topic Luttermann (1999a), pp. 134–136 (calling for an ‘International Court of Accounting’).

  249. 249.

    Luttermann (1997), pp. 485, 504; Luttermann (2010b), pp. 417–424. Gilson (2001), pp. 329–357.

  250. 250.

    See Großfeld and Luttermann (2005) paras 1767–97.

  251. 251.

    Ss 317(1)(1) and 238–41 HGB; see also S 91(1) AktG. On reform and perspectives Luttermann (2017).

  252. 252.

    S 317(1)(3) HGB (see Sect. 7.4.3) with reference to S 264(2) HGB (see Sects. 7.3.4 and 7.4 for ‘a true and fair view’—Bilanzwahrheit). On the selection of the auditor (S 319 HGB): BGH, 21.1.2010 (Xa ZR 175/07), NZG 2010, 310.

  253. 253.

    Ss 264(2)(1) and 297(2)(2) HGB. On materiality, see above Sect. 7.4.3 and Luttermann (2008b), pp. 577–583.

  254. 254.

    BGH, 18.6.2001 (II ZR 212/99), BGHZ 148, 123, 128–9 (MLP AG). Cf. BGH, 15.12.2005 (III ZR 424/04), openJur 2011, 11887. On manipulation and ‘red flags’ Luttermann (2006), p. 778.

  255. 255.

    On statutory audits of annual accounts and consolidated accounts, amending Directive 78/660/EEC and Directive 83/349/EEC and repealing Directive 84/253/EC (2006) OJ L 157/87. Directive 2006/43/EC amended by Accounting Law Directive 2013/34/EU (see Sect. 7.3.3) and Directive 2014/56/EU (see Sect. 7.8.2).

  256. 256.

    Gesetz zur Modernisierung des Bilanzrechts, 25.5.2009, BGBl I 1102; see above Sect. 7.7.2.

  257. 257.

    OJ L 157, 9.6.2006, 87. Amended by Directive 2008/30/EC, OJ L 81, 20.3.2008, 53. On the effective date of S 317 HGB see Art 75(1) EGHGB.

  258. 258.

    Overview in Bundestags-Drucksache 16/10067, 39–41. Merkt (2009), pp. 244–263. Scoreboard on the transposition in the Member States: <http://ec.europa.eu/internal_market/auditing/docs/dir/01_09_10_scoreboard_en.pdf>.

  259. 259.

    Art 17(7)(1) of the Regulation (EU) No 537/2014, 16.4.2014, on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC, OJ L 158, 27.5.2014, 77 (Amendment: OJ L 170, 11.6.2014, 66); see that Article 17 for details on the duration of the audit engagement.

  260. 260.

    Directive 2014/56/EU, 16.4.2014, amending Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, OJ L 158, 27.5.2014, 196, recital (1).

  261. 261.

    Regulation (EU) No 537/2014, ibid., recital (1); equally: Directive 2014/56/EU, ibid., recital (2).

  262. 262.

    13.10.2010, COM(2010) 561 final. Cf. Commission, Green Paper on Corporate Governance in financial institutions and remuneration policies’, 2.6.2010, COM(2010) 284 final.

  263. 263.

    Green Paper COM(2010) 561 final, p. 3.

  264. 264.

    See, e.g., Accounting Law Directive 2013/34/EU, recital (43), highlighting the relevance of ‘a true and fair view’ for an audit opinion; see basically Sects. 7.3.4 and 7.4.

  265. 265.

    Green Paper COM(2010) 561 final, p. 3.

  266. 266.

    The Commission (COM(2010) 561 final, p. 5.) strives for a debate in particular on: the role of the auditor and the independence of audit firms; the supervision of auditors; the configuration of the audit market; the creation of a single market for the provision of audit services; the simplification of rules for SMEs and Small and Medium Sized Practitioners (SMPs); and international co-operation for the supervision of global audit networks.

  267. 267.

    See also below Sect. 7.10. House of Lords, Auditors: Market concentration and their role, 15.3.2011.

  268. 268.

    Of 10.5.2016, BGBl. I 1142. Bundesregierung, Gesetzentwurf (Draft of the AReG), 11.1.2016, Bundestags-Drucksache 18/7219.

  269. 269.

    BGBl I 3846. See also Gesetz zur Einführung internationaler Rechnungslegungsstandards und zur Sicherung der Qualität der Abschlußprüfung (Bilanzrechtsreformgesetz), 8.12.2004, BGBl I 3166. General professional duties are regulated in particular in the Wirtschaftsprüferordnung (WPO).

  270. 270.

    Chapter 2 (Disclosure, Articles 2 to 7). For Germany’s former law according to Art 3 of Directive 68/151/EC see Großfeld and Luttermann (2005) paras 1798–1803. Recently Gesetz über elektronische Handelsregister und Genossenschaftsregister sowie das Unternehmensregister (EHUG), 10 Nov 2006, BGBl I 2553—electronically disclosed since 1.1.2007 (<www.unternehmensregister.de>).

  271. 271.

    Ss 326, 267 HGB. See BVerfG, 1.2.2011 (2 BvR 1236/10), (2011) BB 1136.

  272. 272.

    Directive 2014/56/EU (see esp. Articles 30a–30f) and Regulation (EU) No 537/2014. On the relation of Directive, Regulation and German Law: Bundesregierung, Gesetzentwurf (Draft of the APAReG), 8.10.2015, Bundestags-Drucksache 18/6282, 55 (No 1).

  273. 273.

    Of 31.3.2016, BGBl. I 518. Bundesregierung, Gesetzentwurf (Draft of the APAReG), 8.10.2015, Bundestags-Drucksache 18/6282.

  274. 274.

    BAFA, see: <www.bafa.de/bafa/de/apas>.

  275. 275.

    Details in S 66a(6) Wirtschaftsprüferordnung (WPO) and Art. 26 of Regulation (EU) No 537/2014.

  276. 276.

    S 342b(2)–(5) HGB. Up-to-date information: <www.frep.info/index_en.php>. From jurisdiction e.g. Oberlandesgericht Frankfurt am Main, 31.8.2010 (WpÜG 3/10), (2010) NZG 1433 (coercive payment—Zwangsgeld), and 31.5.2012 (WpÜG 2/12), (2012) ZIP 1662 (Ss 285 No 9(a) and 314(1) No 6(a) HGB), and 7.11.2013 (WpÜG 1/13), (2014) ZIP 79 (costs of the proceedings).

  277. 277.

    Wertpapierhandelsgesetz; e.g., the lack of a prognosis report (Ss 315(1)(5), 289(1)(4) HGB): Oberlandesgericht Frankfurt am Main, 24.11.2009 (WpÜG 11/09, 12/09), (2010) NZG 63. Oberlandesgericht Frankfurt am Main, 7.1.2016 (WpÜG 1/15), (2016) ZIP 316 (procedural law). On access to courts: Hessischer VGH, 28.4.2010 (6 B 395/10) openJur 2012, 32995.

  278. 278.

    See Article 30 of Directive 2006/43/EC, amended by Directive 2008/30/EC, Directive 2013/34/EU and Directive 2014/56/EU.

  279. 279.

    This holds according to Article 33(1) of Accounting Law Directive 2013/34/EU also for accounts drawn up in accordance with Accounting Law Regulation (EC) No 1606/2002.

  280. 280.

    S 31 BGB (Bürgerliches Gesetzbuch).

  281. 281.

    From jurisdiction e.g. BGH, 16.2.2009 (II ZR 282/07), (2009) ZIP 717; cf. BGH, 14.5.2013 (II ZB 1/11), (2013) ZIP 1274.

  282. 282.

    See Directive 2014/95/EU, 22.10.2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, OJ L 330, 15.11.2014, 1.

  283. 283.

    See: Proposal for a Directive amending Directives 78/660/EEC (concerning annual accounts of certain types of companies) and 83/349/EEC (consolidated accounts), 27.10.2004 COM(2004) 725 final (2004/0250(COD)): ‘Member States shall ensure their laws, regulations and administrative provisions on liability apply to the members of the administrative, management and supervisory bodies referred to in [ex-Art 50b (new Art 50c) Dir 78/660/EEC, ex-Art 36a (new Art 36b) Dir 83/349/EEC].’

  284. 284.

    Directive 2006/43/EC (amended by Directive 2008/30/EC, Directive 2013/34/EU and Directive 2014/56/EU), recital (19).

  285. 285.

    Luttermann (2015a), pp. 31, 34, 35.

  286. 286.

    On the legal standard of Bilanzwahrheit (‘a true and fair view’) above in Sect. 7.4 and procedurally under Sect. 7.9. Fundamentally Luttermann (2012), pp. 251, 255, 256.

  287. 287.

    See also S 400 AktG. From jurisdiction e.g. BGH 16.12.2004 (1 StR 420/03), BGHSt 49, 381 (Haffa/EM.TV); OLG Frankfurt am Main, 16.4.2014 (23 Kap 1/08) openJur 2014, 19049 (Rev. BGH, II ZB 24/14); Kammergericht Berlin, 11.2.2010 (1 Ws 212/08) openJur 2012, 12491; LG Hamburg, 9.7.2014 (608 KLs 12/11) openJur 2014, 27240 (HSH Nordbank).

  288. 288.

    S 331 No 4 HGB. On this BGH (4 StR 364/96), (1996) wistra 348.

  289. 289.

    See also Ss 289(1)(5), 297(2)(4), 315(1)(6), 315a(1) HGB, Transparenzrichtlinie-Umsetzungsgesetz, BGBl 2007 I 10 (Bundestags-Drucksache 16/2498). But see Articles 4(2)(c), 5(2)(c) of Directive 2004/109/EC (amended inter al. by Directive 2013/50/EU) and already S 331 No 1 HGB; please note for civil liability S 93(2) AktG (see below in Sect. 9.4).

  290. 290.

    Proposal for a Directive amending Directives 78/660/EEC and 83/349/EEC, 27.10.2004 COM(2004) 725 final (2004/0250(COD)): ‘the Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to [Dir 78/660/EEC, rsp. 83/349/EEC] and shall take all measures necessary to ensure that they are implemented. The penalties and measures provided for must be effective, proportionate and dissuasive.’ (see ex-Art 60a Dir 78/660/EEC and ex-Art 48 Dir 83/349/EEC). Cf. ECJ, joined cases C-387/02 et al. Berlusconi (2005) ECR I 3565.

  291. 291.

    See Sect. 9.4. BGH, 21.3.2005 (II ZR 54/03) (2005) DStR 933, 936 (co-operative). Cf personal liability of board members in cases of deficient ad-hoc-information BGH, 19.7.2004 (II ZR 402/02 et. al.), (2004) 57 NJW 2664, 2668 and 2971 (Infomatec AG).

  292. 292.

    See also S 265b StGB (obtaining credit by false pretences—Kreditbetrug) and—in the case of insolvency—Ss 283, 283a StGB (bankruptcy—Bankrott), S 283b StGB (breach of the requirement to keep accounts—Verletzung der Buchführungspflicht).

  293. 293.

    See BGH, 6.4.2000 (1 StR 280/99) (2000) 23 ZIP 1210 with comment by Luttermann; also BGH, 13.5.2004 (5 StR 73/03), BGHSt 49, 147, and 13.12.2012 (5 StR 407/12), (2013) ZIP 313 (group of companies); BVerfG, 23.6.2010 (2 BvR 2559/08), BVerfGE 126, 170. For more details about sanctions, see Claus Luttermann, in Kropff and Semler (2003) vol 5/1, S 264 HGB paras 19–21, 121–28, and 165–69.

  294. 294.

    See basically hereinafter Sect. 7.9 and Chap. 9. Luttermann (2010a), pp. 341–350.

  295. 295.

    See Großfeld and Luttermann (2005) paras 168, 204–5; see also paras 150–1 (European ‘Ordre Public’) and above Sect. 7.3.4.

  296. 296.

    See above Sects. 7.4.1–7.4.4 and 7.5.3–7.5.4.

  297. 297.

    Basically Luttermann (2015a), pp. 31–48. See above Sect. 7.7 and Chap. 8; esp. the civil procedural significance of the signing of the accounts (S 245 HGB, S 416 ZPO) in Sect. 8.5.1 and above in Sect. 7.3.1.

  298. 298.

    Accounting Law Directive 2013/34/EU, recital (9) and Article 4(3).

  299. 299.

    Cf. systematically Accounting Law Directive 2013/34/EU, among other things also recital (22): ‘Estimation involves judgements based on the latest available reliable information’, i.e. systematically in the sense of the measure of proof mentioned the ‘evidence considered’.

  300. 300.

    See esp. Sects. 7.7.6–7.7.8, 7.10 and 7.12.

  301. 301.

    See proposal by Luttermann (1999a), pp. 134–36.

  302. 302.

    Rhetoric, Book I, Ch. 15.

  303. 303.

    Basically Luttermann (2015c), pp. 274–282.

  304. 304.

    IFRS Foundation, Constitution 2a (2010). Cf. Preface to IFRS 6a. The Wall Street Journal, 3.2.2010, 12, about IASB-Chairman Tweedie: ‘The ayatollah of accounting’ strongly defends his principles’. See also on the lack of legitimacy above Sect. 7.3.5.

  305. 305.

    IFRS, Conceptual Framework for Financial Reporting, Project Summary and Feedback Statement (September 2010), 2.

  306. 306.

    Ibid.

  307. 307.

    See <www.ifrs.org/current-projects/iasb-projects/conceptual-framework/Pages/Conceptual-Framework-Summary.aspx> (accessed: 8.8.2016).

  308. 308.

    See above Sect. 7.7.6. Critically on the world-monopoly (Weltmonopol) of the IASB as an uncontrolled power also already Claus Luttermann, IASB: Eine unkontrollierte Macht, Handelsblatt, 16.7.2009, 6; Luttermann (2011b), pp. 965–972. Cf. Sunder (2011), pp. 291–306.

  309. 309.

    Luttermann and Pöschk (2014), pp. 663–668.

  310. 310.

    Cf. above Sect. 7.7.5 and on this topic from an intercultural perspective Luttermann and Luttermann (2007), pp. 434–440.

  311. 311.

    Tim Bray et al. (eds), Extensible Markup Language (XML) 1.0 (Fifth Edition) <www.w3.org/TR/REC-xml>.

  312. 312.

    Claus Luttermann, IASB: Eine unkontrollierte Macht, Handelsblatt, 16.7.2009, 6.

  313. 313.

    See Ss 5b, 52 Abs. 15a Einkommensteuergesetz (EStG). Bundesministerium der Finanzen, 28 September 2011, IV C 6 - S 2133-b/11/10009. Cf. Hoffmann et al. (2013).

  314. 314.

    Explicitly: <www.ifrs.org/XBRL/IFRS-Taxonomy/Pages/IFRS-Taxonomy.aspx> (accessed: 8.8.2016). Cf. Amendments to IFRS for SMEs (May 2015).

  315. 315.

    See Ram and Newberry (2013), pp. 3–17 and above Sect. 7.3.5. Cf. also Devi and Samujh (2015), pp. 124–138. With special focus on Fiji: Chand et al. (2015), pp. 139–154.

  316. 316.

    See esp. Sects. 7.9.2 and 7.3.5. See also Chap. 9.

  317. 317.

    Accounting Law Directive 2013/34/EU, recital (10); see above Sect. 7.7.4. Claus Luttermann, Europas Subsidiarität: Bayerisches Reinheitsgebot, Welthandel und ‘Brexit’ (2016) 62 RIW 08/2016, 1 (editorial). Note internationally also above Sects. 7.7.4 and 7.7.8 (multijurisdictional approach).

  318. 318.

    See Sect. 7.7 and Chap. 9.

  319. 319.

    Großfeld and Luttermann (2005) paras 86–96.

  320. 320.

    See Sects. 7.4.6 and 7.8. Also Claus Luttermann, in Kropff and Semler (2003) vol 5/1, 295 paras 123–33 and 798 paras 119–69.

  321. 321.

    See Sect. 7.8 and, e.g., Young (2006); Crumbley et al. (2015).

  322. 322.

    Commission Recommendation 15 Feb 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board (EC) 2005/162, OJ L 52, 25.2.2005, section III (11.2.) and Annex 1 (4.).

  323. 323.

    See S 161 AktG (S 314(1) No 8 HGB) and German Corporate Governance Codex 5.3.2 (7.2.1).

  324. 324.

    Luttermann (2003), pp. 745–750. Weil et al. (2016).

  325. 325.

    See generally S 324 HGB. On this, e.g., Oberlandesgericht München, 28.4.2010 (23 U 5517/09), (2010), 1082. Basically Directive 2006/43/EC Art 41; Bundesregierung, Gesetzentwurf, 30.7.2008, Bundestags-Drucksache 16/10067, 101-2. Bahreini (2012).

  326. 326.

    Recommendation 15 Feb 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board (EC) 2005/162, OJ L 52, 25.2.2005, section III (13.1). See in more detail below in Sect. 9.3.3.

  327. 327.

    See Sects. 7.7.8 and 7.3.4. Luttermann (2000), pp. 907–921.

  328. 328.

    Arthur Levitt, The ‘Numbers Game’ 28 Sept 1998, speech at NYU Center for Law and Business, <www.sec.gov/news/speech/speecharchive/1998/spch220.txt>. For more examples, see Claus Luttermann, in Kropff and Semler (2003), vol 5/1, 781 paras 62–82.

  329. 329.

    Luttermann (2015a), pp. 31–48.

  330. 330.

    Luttermann (2015c), pp. 274–282.

  331. 331.

    Cf. Judge L. Hand in Dabney v Chase National Bank, 196 F.2d 668, 675 (2nd Cir. 1952).

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    Claus Luttermann

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Luttermann, C. (2017). Accounting as the Documentary Proof of Good Corporate Governance. In: German Corporate Governance in International and European Context. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-54198-2_7

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