Financial statement
The financial statements are the calculated conclusion of a commercial financial year. He notes the financial situation and the success of a company and includes the completion of the accounting, the collection of documents for accounting and the audit, validation and publication. For companies that are subject to the obligation to account, which are the main components of the financial statements, the balance sheet and the profit and loss account, if necessary, by the notes and the annual report. Small trader and freelancers put on a net income method.
In addition to the annual financial statements, there may be interim reporting.
Functions
The financial statements has two basic functions: It provides information on the economic situation of the company and provides the basis for the distribution of earnings.
- Information Function: The documentation of the net assets, financial position and earnings of the reporting date is the basis for planning and future decisions of the company, the shareholders and external groups. The result of the financial statements is used by banks and other lenders as a criterion for lending and can be used as evidence in any legal dispute in accordance with § 258 HGB.
- Payment calculation function: The financial statements are the basis for taxation of the company and for the determination of performance-based payments such as dividends and bonuses (calculation function).
Legal framework
The commercial legal basis for the preparation of financial statements mainly include the German Commercial Code ( generally accepted accounting principles ) and the Austrian Business Enterprise Code. In Switzerland and in Liechtenstein since 1883, the Code of Obligations provides the legal basis. Publicly traded companies must also respect international accounting standards. The two most important rules are the International Financial Reporting Standards ( IFRS), mandatory for Group companies, and the United States Generally Accepted Accounting Principles (U.S. GAAP) for companies that are active in the U.S. market. The application of U.S. GAAP may be a prerequisite for listing in the United States. The sometimes significantly differing requirements of individual standards may have the need for a parallel accounting records and financial statements of several parallel result. The German Accounting Standards Committee developed recommendations for standardization in Germany the national and international principles. However, it has now lost as a result of the advance of IFRS in importance.
This framework of rules are configured by more specific laws and regulations. Mention may be made, in particular the Public Disclosure Act, which defines the publication of the accounts of certain companies, as well as tax provisions, such as the Income Tax Act. In addition, special features (150 et seq or § eg § § 42 Limited Liability Companies Act ) arising in connection with the legal form.
Also, for certain industries, there are special rules. Thus, the annual financial statements in Germany takes place at banks after the credit institution Accounting Regulation (RechKredV ), commercial insurance after the insurance company Accounting Regulation ( RechVersV ) and the Pension Fund under the Pension Fund Accounting Regulation ( RechPensV ).
For installation company committed
Annual financial statements in accordance with GAAP, all merchants in accordance with § § 242 ff set (see accounting obligations ).
According to § 242 para 4 HGB sole traders in terms of § 241a HGB from the requirement are exempted from preparation of financial statements; these are those that do not exceed € 500,000 revenue and 50,000 € Net income at the first and the last two consecutive graduation dates.
Time of preparation
The balance sheet as an integral part of the financial statements in accordance with § 242 HGB from any merchant to start of his business and called for the end of each fiscal year. The deadlines are staggered: Large and medium-sized corporations must prepare the annual financial statements for the first three months, small corporations in the first six months of the year ( § 264 HGB). Non-capital are to maintain a " a normal course of business appropriate time " bound ( § 243 HGB), this corresponds to a normal course of business for a period of up to nine months and in case of unforeseen events up to twelve months.
Preparation
Check the preparatory work in the financial statements and correct the result, which is caused by the ongoing accounting, and prepare it internal and legal requirements according to. The most important preliminary work are listed.
- The inventory notes the actual inventory of the assets and debts. The stocks included in the inventory are valued according to generally accepted accounting principles and differences between the desired and actual stock derecognised.
- By identifying and booking Amortisation Impairment of fixed assets flow over the useful life of the various fixed assets in the financial statements. If applicable, depreciation also required for current assets.
- Requirements must be assessed and evaluated on their credit rating. Identifiable risks of bad debt losses are taken into account by the reservation of specific and general allowances.
- The accrual-based income calculation is ensured by the temporal prepaid and the formation of provisions.
- Also on the preliminary closing entries include the setting statutory or voluntary reserves.
- In addition to the steps mentioned a number of other corrections can be necessary. These would include the definition of the private from the business sector (captive) or the thematic breakdown of non-operating income and expenses (eg donations).
List
The preparation of financial statements is done in several consecutive steps:
Closing accounts
- Completion of the sub-accounts: Often important accounts of clarity are split due to in sub-accounts whose balances must be merged in the financial statements in the appropriate ledger accounts ( for example, discounts).
- Completion of the main accounts: The main accounts are closed by their balances drawn and transmitted over the closing balance sheet account in the balance sheet or the profit and loss account in the profit and loss account. Here, the splitting of the result in an operating result is often necessary, which is developed from the operational service, and to identify further levels of the earnings, the non-operating and extraordinary income and expenses.
Degree overview
The " final summary", also called " main conclusion overview " or " Operational Overview " table in question is used to check the numerical work. It provides in compressed form is the initial stocks, the sum of all debit and credit entries, the balances of all accounts, the above-mentioned preliminary corrections and their outcome and divided the figures final after the inventory and accounts on the success.
The company overview is submitted to the tax office in addition to balance sheet and profit and loss account upon request. For small businesses it can replace the financial statements, if the formal requirements and the statutory retention periods are met.
Statement
Is responsible for the preparation of the merchant. For corporations the financial statements are prepared by management and then forwarded for review and determination. The finding, that the approval of the financial statements is the responsibility of a GmbH to the shareholders ( § 42a Limited Liability Companies Act ), the AG the Supervisory Board or the General Meeting ( § 172 AktG). Cooperatives according to § 38 para 1 sentence 5 GenG the Supervisory Board to audit the financial statements and on the basis of tests he has to report to the General Assembly adoption of the annual financial statements. The approval of the annual financial statements is in accordance with § 48 Section 1 GenG the General Assembly. For partnerships, the annual accounts shall be approved by the general meeting ( the so-called basic business).
Accounting documents
According to German and Austrian law, the financial statements is the compilation of balance sheet and profit and loss statement ( § 242 HGB), which are extended for corporations and limited partnerships without individual as personally liable partners to explanatory notes. Furthermore, medium and large corporations are required to include a management report. In addition to publicly traded corporations that are not required to prepare consolidated financial statements, the annual financial statements a statement of cash flows and changes in equity expand ( § 264 paragraph 1 HGB)
The accounting under IFRS and U.S. GAAP calls for the submission of further documents. These include the statement of cash flows (cash flow statement), the statement of comprehensive income ( statement of comprehensive income ), the changes in equity ( statement of changes in stockholders 's equity), segment reporting, as well as information concerning selected financial data from the past or on the courses of issued securities.
For the determination related to income taxes, the balance sheet must be submitted to the tax office. Because of the differences in trade and tax provisions for financial and accounting it is necessary for most businesses to create both a legal and a commercial tax base.
Disclosure and auditing requirements
The financial statements of certain businesses, especially larger corporations, cooperatives, companies in certain industries (insurance, banks) or farms of the public sector, must be tested by independent institutes and subsequently published in the commercial register and in the Federal Gazette are ( disclosure). Nature and scope of audit and disclosure requirements for corporations depends on the size. While a breach of these obligations was previously hardly sanctioned, this changed with the enactment of the Law on electronic commercial register ( EHUG ). Public companies publish the official ingredients usually together with additional information for the shareholders in the business report.
Obligated companies have to submit their annual accounts with the Federal Verlagsgesellschaft mbH electronically. The Federal Office of Justice is obliged ex officio to initiate proceedings against any offending the Federal Gazette due to failure of the mandatory reporting companies. By the end of 2009, the filing was permitted in paper form. Since 1 January 2007, the financial statements may be submitted electronically. Previously, the annual accounts with the local courts had to be submitted, this last 1.1 million businesses were obliged. 2008 were opened around 460,000 administrative fine proceedings for non - submission; In 2009, about 200,000.
Income distribution
The profit and loss account ( called in German-speaking Switzerland and Liechtenstein income statement), the individual stages of the result, including the effects of taxation dar. As the remaining profit or loss is distributed ultimately among the business owners will depend on the legal form of the company. In addition to contractual arrangements statutory provisions, for example, the liability of individual shareholders in the OHG and KG, the setting of reserves and the need for the formation of profit and loss carryforwards are observed. Decisions on the use of result are part of the disclosure requirements.
Evaluation
With the analysis of financial statements, the annual financial statements analysis is concerned. It prepares balance sheet and profit and loss account and determines and assesses indicators such as capital adequacy, asset growth, profitability, liquidity or quotient for finance and investment. Apart from the official components of the financial statements internal data as due dates, orders or results of the planning bill can be used for the evaluation for internal purposes.
Individual and consolidated financial statements
If several legally independent companies incorporated in a group in their separate financial statements are usually merged into one consolidated financial statements in order to provide the users of financial statements a true picture of the situation of the whole group. Under certain conditions, the consolidation of financial statements required by law. Thus, capital market-oriented Group's parent companies are required based in the European Union, for fiscal years beginning after December 31, 2004, to prepare consolidated financial statements according to IFRS rules ( § 315 HGB). Since IFRS financial statements shall necessarily contain the previous data, affected companies were forced to a year earlier to account for parallel under IFRS.