Company FAQ
9. Accounting Rules: What is IFRS (International Financial Reporting Standards) and what are the main differences to US GAAP (United States General Accepted Accounting Principles)?
Our Group Annual Results 2005 for the first time have been published according to IFRS.
These accounting standards are drawn up by the International Accounting Standards Board (IASB), a London-based civil-law organisation of national accountancy and auditing bodies. An EU directive adopted in 2002 requires almost all capital market-oriented companies in the European Union to prepare and publish their consolidated financial statements in accordance with IFRS (formerly IAS) from financial year 2005 onwards.
The changes over US GAAP are minimal. The main differences are as follows:
- The minority interest in profit and loss is calculated identically, but reported as earnings allocation, and thus shown "below the line" (not "above the line" as under US GAAP) in the annual and interim reports.
- Minority interests on the balance sheet are thus reported as part of shareholders' equity (not as part of long-term liabilities as under US GAAP)
- Investment classification and valuation is adjusted after the requirements of IAS 32 "Financial instruments: presentation and disclosure" and IAS 39 "Financial instruments: recognition and measurement".
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Segmental reporting is extended by a "Consolidation column", which shows business between segments as well as positions that can be allocated to the group (the corporate centre = the unallocated overhead)
- Inter-segment transactions und corporate financing are shown here (under US GAAP those were allocated to the segments)
- Hybrid capital will only be shown on a whole-group basis (not allocated to segments like under US GAAP)
- Reinsurance contracts are classified after IFRS 4 "Insurance contracts". The valuation of the whole technical accounting is still in accordance with US GAAP, which means no major technical deviations compared to the previous year.
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