International accounting country systems

Many accounting scandals in German accounting history

Many accounting scandals that have occurred in the history of German accounting have had a significant impact on the way German GAAP is formed. The biggest scandals with the greatest impact include Friedrich Krupp AC in 1873, Danat Bank in 1931, Arcandor AG in 2009 and most recently his Schrecker in 2012. In 1931, Germany, which had held the top spot as the second largest country, suffered a major financial crisis. Due to confidence loss in German banks, the Weimar government has ordered that all the banks would be closed until August of that year, this in turn greatly affected the collapse of the German economy, because six million Germans would be without a job. The outcome of this affects the accounting system through the currency problems, which directly connected with the financial crises. It was observed by Obstfeld and Taylor 2004 that the commonplace observation that international economic affairs were different between years of the two world wars. This left gaps in the financial system that also in turn help lead to the economy crisis.

Arcandor AG: A major scandal

Arcandor AG is a holding company in Essen, Germany. The company was responsible for overseeing companies in the business of mail order and online shopping, as well as department stores and tourism services. Founded in 1999 by the merger of Karstadt Warenhaus AG and Quelle AG. The company employed close to 68,000 in 2005 and produced and annual sales of €15.5 billion. In 2009 the company incurred a financial hardship and filed for assistance through the German government. The company’s assistances was then rejected which forced the company to file for bankruptcy in June of 2009 because they could no longer pay the rent for department stores that they previously sold and then lease-backed. This bankruptcy leads to a company filing for insolvency.

The Schlecker scandal

The Schlecker scandal that occurred in 2012 dealt with a chain of German pharmacies that were family owned, who filed for insolvency in January 2012 because their company was not bringing in enough customers in competition to the rival chains. After the case was reviewed the former owners and auditors were charged for violating laws within the bankruptcy act and using private accounts to store company funds. This scandal had an effect on the accounting system in Germany because of the regulations and laws that companies need to abide by when it comes to company funds and profits.

Accounting System Today

Accounting System Today

Comparison with a Canadian Company

Comparison with a Canadian Company

The global focus on International Financial Reporting Standards

The global focus on International Financial Reporting Standards impacts on the Canadian accounting system in reference to the General Accepted Accounting Principles. A Canadian organization such as BCE Inc. uses the historical costs as the main accounting convention. In Canada, it is the system, but there are exceptions to the financial institutions where all the financial instruments held for trade are assessed at fair value. There is also the exemption to the assets that are deprived of all other creditor’s accessibility and are relevant to the coverage of pensionable obligations or comparable liabilities in the long run.

BCE Inc.: Insider trading scandal

In the year 2015, BCE Inc. was rocked by a scandal that involved the vice of insider trading. A former executive assistant to a senior person in the organization engaged in insider trading hence netting her friends and family $ 1 million between the years 2012 and 2015. The regulator made the note that the investigation did not target BCE as an organization, rather the culpable personnel. The executive assistant was offering privileged information in relation to the acquisition of Glentel Inc., Astral Media Inc., and Bell-Astral to various friends and family members. It is through the use of the information that the friends and family traded the securities of these organizations and generated profits worth more than $ 1 million.

Conclusion

Scandals are common in various industries across the global economy and the business organizations should implement preventive measures to counter the vices. Other than the mentioned scandals, there are other even major ones that have global impacts. For example, there is the Volkswagen scandal that saw the company produce and export substandard vehicles around the world in terms of environment conservation. In the investigations of the scandals, it important to note that the different accounting systems impact the manner in which events unfold. It is the perpetrators of the scandals that are pursued in the investigations, but not the organizations involved.

Sources for the Scandal section:

https://www.wsj.com/articles/SB124454410163897547

https://www.ft.com/content/176a93be-54e8-11de-b953-00144feabdc0

https://www.ft.com/content/049ef850-0248-11e6-99cb-83242733f755

http://skepticism.org/timeline/july-history/7345-germanys-danat-bank-goes-bankrupt-closes-creating-loss-confidence-banks.html

http://link.springer.com/article/10.1007/s11698-007-0014-4