Bio- and regenera- tive Medicine as an important growth Market

16 HHL RESEARCH REPORT 2012 finAnCE, ACCOunTing And CORPORATE gOvERnAnCE 17
enforcement
Consolidation
Performance
Reporting
Standard
Setting
IfRS
The internationalization of financial reporting is advancing rapidly
following the concept of the ‘International Financial Reporting Standards’
(IFRS). The goal is to utilize one financial reporting language
all around the globe and thereby to supersede the national accounting
systems. The Chair led by Prof. Dr. Zülch actively participates in
the international discussion through its research activities shown
in the graphic.
cHair oF accounting and auditing new books
consolidation
in accordance
with iFrS
The research and teaching at HHL’s
Chair of Accounting and Auditing
under the leadership of Prof. Dr.
Henning Zülch deals with International
Financial Reporting Standards
(IFRS). Those standards are binding
for all capital market-oriented companies
within the European Union
since 2005. In the scope of international
financial reporting, three
topics represent the central pillars of
the Chair‘s research: consolidation,
performance reporting as well as
standard setting and enforcement.
Consolidation entails group reporting
by capital-market oriented companies
in accordance with IFRS . Economists
unanimously agree that today groups
represent the most important organizational
form for the economic activities
of large enterprises . Groups are
conglomerates of legally independent
but economically dependent enterprises .
The economic importance of groups
stresses the need for an information tool
which stakeholders like investors, creditors,
employees as well as the management
may use to assess the economic
situation of a company . Consolidated
finan cial statements represent such
a tool, which is why group accounting
is of particular importance for
information purposes . Regardless of
how companies are organizationally
linked within a group, their business
activities are joined by various existing
supply and service relationships .
Consequently, the financial statement of
one entity within the group cannot provide
accurate insight into the financial
and earnings position of a group . This
problem is caused by the interrelations
within the group which blur the individual
financial statements . Merely adding
up individual financial statements does
not accurately reflect the situation of
the “group” as an economic unit . Only
consolidated financial statements,
Glossary
consolidation
Consolidation in the context of financial accounting
refers to the aggregation of financial statements of a
group company as consolidated financial statements.
in which all interdependencies within
the group have been eliminated, can
faithfully represent the economic
situation .
The Chair’s research on consolidation
focuses on the various steps of preparing
consolidated financial statements .
It deals with the acquisition of group
companies (business combinations),
techniques for preparing a consolidated
financial statement (regulations and
procedures) and impairments of assets
acquired in the course of an acquisition
or a merger . The research work in
this field is supported by the Center for
Financial Reporting and Consolidation
(CFRC), initiated by Prof . Dr . Mark-Ken
Erdmann (Rickmers Holding) in 2010 .
The CFRC aims to discuss business
problems and solve them consistently
based on profound theory . Besides
Prof . Dr . Henning Zülch and Prof . Dr .
Mark-Ken Erdmann, Prof . Dr . Bernhard
Schwetzler as well as Dr . Johannes
Wirth were appointed as members of
the governing board of the CFRC . Due
to his multifaceted commitment to
research and teaching at HHL, and
especially due to his active role in establishing
the CFRC, the Senate of HHL
unanimously decided to appoint Prof .
Dr . Mark-Ken Erdmann as an Honorary
Professor in 2011 .
Research on business combinations
pays particular attention to the accounting
standard IFRS 3 . This standard regulates
procedures on how to account for
Accounting
according to
International
Financial Reporting
Standards
(IFRS) has been
undergoing dynamic
changes in
the last few years .
This also applies to the reporting
of income directly booked against
equity in the so-called other comprehensive
income (OCI) . Prof . Dr .
Pronobis shows that these OCI
results are not directly processed
by the capital market but at the
same time have high relevance for
the forecasting of future results .
The findings presented confirm the
latest developments demanding
more prominent reporting of OCI .
Approximately
one in four financial
statements
by capital-market
oriented companies
are faulty .
This is the noteworthy
result
of random tests
conducted by the
Financial Reporting Enforcement
Panel and the Federal Financial
Super visory Authority since 2005 .
The Enforce ment Guide gives an
overview of the relevant legal and
organizational framework of the
enforcement process and analyzes
errors as well as the accounting
problems which caused them .
Based on this, important recommendations
are given for practice
concerning all relevant accounting
issues .
cHair oF accounting
and auditing
cHairHolder
Prof. dr. Henning Zülch
core coMpetencieS/
reSearcH intereSt
• consolidation
• performance reporting
• accounting in private firms
• standard setting and enforcement
contact
www.hhl.de/accounting