German Accounting Standards Board adopts new strategy

(Berlin, 16 July 2003) The German Accounting Standards Board (GASB) has adopted a new strategy for its work as the German Standardsetter. Following recent changes in international financial accounting and reporting, the GASB will intensify its cooperation with the International Accounting Standards Board (IASB). The development of International Accounting Standards can thereby be supported more actively and the concerns of German preparers and users of financial information taken into consideration.

GASB’s conclusion is in line with the decisions taken over the last few months. For each financial year starting on or after 1 January 2005, European companies will have to prepare their consolidated accounts in conformity with the International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) if, at their balance sheet date, their securities are admitted to trading on a regulated market of any Member State of the European Union. As put forward by the German government in a catalogue of measures to strengthen the capital market, all other German companies will have the option of adopting IAS/IFRS, which will be supported by modernising German GAAP next year. The outstanding importance of the IAS/IFRS in the future is emphasized by numerous exposure drafts and improvements to existing IAS, which have to be monitored actively. Because of the convergence efforts, the extent of the work towards global standards will remain on a high level over the next years.

“German Accounting Standards have already moved consolidated financial reporting closer to the international standards”, said Klaus Pohle, GASB’s Chairman and former CFO of Schering. “Some standards like German Accounting Standard (GAS) 5 Risk Reporting have set an example for the upcoming internationally converged requirements and have modernised German legislation. This could only be accomplished with the support of numerous volunteer experts. We must build on their enormous experience in the future to influence the development of international reporting. The goal is to accompany new IFRS projects and interpretations actively and to establish GASC as a centre of competence for international accounting and reporting.”

Risk Reporting and MD&A will keep their important role within the German Accounting requirements, because - in the absence of an IAS/IFRS - on this topic future European IAS/IFRS adopters will have to comply with these requirements. Currently GASB is developing an exposure draft on MD&A which will contribute– just like Risk Reporting – to the international discussion.

In the wake of its new strategy, GASB calls for a wide-ranging discussion of the international reporting standards among accounting experts. All companies affected by the Regulation on the application on IAS will have to convert to IAS/IFRS next year. “Early planning can avoid problems as encountered by some when the Euro was introduced”, said Klaus Pohle. “We expect the number of experts working with us to increase. We need their support.”

For further information: Liesel Knorr, General Secretary, Tel +49 30 2064 1211.