The Fourth Directive
History of Fourth Directive
Company law directives are published under the authority of the Treaty of Rome (Article 54(3) (g)). The council and the commission want to co-ordinate safeguard to protect the interest of member state and others, in such a way that these safeguard are become similar across the EU. The objective of EU is to convey a common market that allows freedom of capital, goods, persons and services between member countries. EU adopted so many directives which are dealing with accounting issues. From that, the Fourth Directive and Seventh Directive are most important. Drafting of the Fourth Directive was started in 1965 when there were only six members of European Communities but it was completed after 15 year in 1978 when there were nine members. The first draft was published in 1971 before the UK, Ireland and Denmark had entered the EU in 1973. The main objective of the Fourth Directive to harmonize accounting principles, presentation, publication and audit, by laying down minimum standards to be applied by members states (Nobes, 2000). It addresses all aspects of the financial statements of individual companies.
Differences between (UK, Germany & France)
There are so many areas of financial reporting in which differences be found but here are the some of the examples like formats, treatment of leases, Inventory, deferred tax and recognition of Intangibles. Now here are detail overviews of difference in three European Countries.
Formats
The format means the kind of structure for Income Statement, Balance Sheet and Cash Flow Statement, which country using which type of formats for financial statements. The first of all about Income Statement, UK companies are using the formats according to prescribed company law of UK which describe four formats for Income Statement but generally two formats are used in practice which are turnover less expenses by function and expenses by type. Germany may only be prepare in vertical format and France having
Company law directives are published under the authority of the Treaty of Rome (Article 54(3) (g)). The council and the commission want to co-ordinate safeguard to protect the interest of member state and others, in such a way that these safeguard are become similar across the EU. The objective of EU is to convey a common market that allows freedom of capital, goods, persons and services between member countries. EU adopted so many directives which are dealing with accounting issues. From that, the Fourth Directive and Seventh Directive are most important. Drafting of the Fourth Directive was started in 1965 when there were only six members of European Communities but it was completed after 15 year in 1978 when there were nine members. The first draft was published in 1971 before the UK, Ireland and Denmark had entered the EU in 1973. The main objective of the Fourth Directive to harmonize accounting principles, presentation, publication and audit, by laying down minimum standards to be applied by members states (Nobes, 2000). It addresses all aspects of the financial statements of individual companies.
Differences between (UK, Germany & France)
There are so many areas of financial reporting in which differences be found but here are the some of the examples like formats, treatment of leases, Inventory, deferred tax and recognition of Intangibles. Now here are detail overviews of difference in three European Countries.
Formats
The format means the kind of structure for Income Statement, Balance Sheet and Cash Flow Statement, which country using which type of formats for financial statements. The first of all about Income Statement, UK companies are using the formats according to prescribed company law of UK which describe four formats for Income Statement but generally two formats are used in practice which are turnover less expenses by function and expenses by type. Germany may only be prepare in vertical format and France having
Bibliography: Books Mohapatra Das, A.K (2007) International Accounting, Eastern Economy Edition, New Delhi: Prentice-Hall of India Private limited. Nobes & Parker, (2000) Comparative International Accounting, 6th Edition, Financial Times Prentice Hall. Roberts, Weetman, Gordon, (1998) International Financial Accounting: A Comparative Approach, Financial Times, Pitman Publishing.