Finance directors slam German accounting standards

A survey published by Exact Software UK, an ERP vendor, found that, whereas US and French standards were felt by respondents to be particularly difficult to comply with, it was German financial reporting legislation that presented the most significant challenges for managers in understanding their international subsidiaries.

Of respondents who answered the question: ‘Which national standards cause the most problems in presenting a fair picture of your business?’, 41 per cent mentioned Germany. A quarter of respondents found French accounting standards particularly distorting. Italy and the United States came in equal third place, with 16 per cent of respondents identifying those two countries.

Andrew Kehoe, Senior Consultant at Exact Software commented: ‘A surprisingly large number of British companies do not find understanding the performance of their subsidiaries in Germany, France or Italy not at all easy.

‘This is worrying when you consider how much effort goes into the standardisation of practices between EU partners and how much integration is taking place in the Single Market.

‘The Exact survey illustrates starkly the problems that finance directors face when managing multi-national companies and highlights a challenge, for UK managers, but also for EU legislators.’

Other results from the survey include:

Accounting standards in the US and France are the most difficult to comply with. 4

49 per cent of companies have separate accounting IT systems in each subsidiary and only 30 per cent of companies operate a single system to collect and report their financial management information. Incredibly, 22 per cent of finance directors surveyed were unable to name or categorise which system was used across the group as a whole.

The average time for consolidation of financial results across an international company was 8 days.

Exact Software UK contacted 76 Finance Directors or equivalent, operating in companies with international subsidiaries, in November 1999.

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Review of 1999: STANDARDS