Free Accounting Dissertations - Financial Accounting And Reporting In France Outline Introduction ‘duality’
Financial Accounting and Reporting in France
Outline
Introduction
‘Duality’ of French Accounting System
Comparison of French Accounting System with US and UK Accounting Systems
Benefits of Harmonization
Effect of EEC Wide Uniform Accounting Practices on France
Conclusions
Summary
French Accounting Standardization Commission introduced a formal dualism, where cost accounting codes were separated from financial accounting codes. This resulted in a formal book keeping system where codes could be simply filled in a pre-set format for the balance sheet and profit and loss account
France has followed a strict accounting system and for historical reasons its accounting system has remained significantly different from other EEC countries. Uniform accounting standards introduced by the EEC will gradually harmonize accounting practices throughout the EEC. The historical differences and national pride will probably allow continuation of a few differences.
French and American systems continue to be substantially different. The effort to introduce an International Accounting System will be helpful for the new global economy, and it is likely that in the years to come most of the developed countries will adopt a broadly common accounting system.
Introduction
The accounting system variation in different countries is largely imbedded in history. The system of government and the way business was viewed in those countries influenced their financial accounting procedures.
Regulation in business accounting in France was introduced in 1673 when accounts record keeping in a particular format was introduced. The commercial law of 1808 and limited company regulations of 1867 strengthened the French business accounting system.
The introduction of Income Tax Regulations in 1920 changed the focus of financial accounting towards the tax-based accounting. European accounting specialists started focusing on a chart-based system, to standardize and simplify the financial reporting procedures [Roberts, 2005]. The resulting system mimicked the operating procedures of a business enterprise. The input and output from the enterprise and the activities within the enterprise were included in the accounting system. The development of this accounting format during the war years led to financial accounting and reporting format in the Plan Comptable Général (PCG), the General Accounting Plan. The Accounts Standardization Committee prepared the first national PCG in 1947. The 1947 PCG was designed for public sector enterprises.
Duality of French Accounting System
The new PCG has continued in the old historical chart format but it made a formal dualism as its basis. [Parker, 2003] described this ‘formal dualism’ as separation of cost and financial accounting. The codes for cost and financial accounting were totally separated and the profit and loss accounting system was based on expenditure by nature, e.g. expenditure on materials, depreciation, labor costs etc.
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