Fiscal Accounting and Reporting inFrance
‘Duality’ of French Accounting System
Comparison of French Accounting System with US and UK Accounting Systems
Benefits of Harmonization
Consequence of EEC Wide Uniform Accounting Practices on France
Gallic Accounting Standardization Commission introduced a formal dualism, where cost accounting codifications were separated from fiscal accounting codifications. This resulted in a formal book maintaining system where codifications could be merely filled in a pre-set format for the balance sheet and net income and loss history
France has followed a rigorous accounting system and for historical grounds its accounting system has remained significantly different from other EEC states. Uniform accounting criterions introduced by the EEC will bit by bit harmonise accounting patterns throughout the EEC. The historical differences and national pride will likely let continuance of a few differences.
Gallic and American systems continue to be well different. The attempt to present an International Accounting System will be helpful for the new planetary economic system, and it is likely that in the old ages to come most of the developed states will follow a loosely common accounting system.
The accounting system fluctuation in different states is mostly imbedded in history. The system of authorities and the manner concern was viewed in those states influenced their fiscal accounting processs.
Regulation in concern accounting in France was introduced in 1673 when histories record maintaining in a peculiar format was introduced. The commercial jurisprudence of 1808 and limited company ordinances of 1867 strengthened the Gallic concern accounting system.
The debut of Income Tax Regulations in 1920 changed the focal point of fiscal accounting towards the tax-based accounting. European accounting specializers started concentrating on a chart-based system, to standardise and simplify the fiscal coverage processs [ Roberts, 2005 ] . The ensuing system mimicked the operating processs of a concern endeavor. The input and end product from the endeavor and the activities within the endeavor were included in the accounting system. The development of this accounting format during the war old ages led to fiscal accounting and describing format in thePlan Comptable General ( PCG ) ,the General Accounting Plan. The Accounts Standardization Committee prepared the first national PCG in 1947. The 1947 PCG was designed for public sector endeavors.
Dichotomy of French Accounting System
The new PCG has continued in the old historical chart format but it made a formal dualism as its footing. [ Parker, 2003 ] described this ‘formal dualism’ as separation of cost and fiscal accounting. The codifications for cost and fiscal accounting were wholly separated and the net income and loss accounting system was based on outgo by nature, e.g. outgo on stuffs, depreciation, labour costs etc.
THE 1947 system for public sector endeavors and its enlargement to include private endeavors in 1952, 1957 and 1962 made the new PCG based system applicable to all endeavors. A revenue enhancement ordinance was besides introduce to convey the revenue enhancement return format in line with PCG format to convey the entire accounting system in conformance with PCG chart based system.
The system was intentionally unbroken simple for easy usage and transparence of accounting. These PCGs relied on a system of history codifications. The endeavor comptroller merely has to sort all minutess harmonizing to the nature of disbursal into its history codification. Inserting this information into the prescribed signifiers could so bring forth the fiscal statement.
The ground for broad scale credence of PCG format are its simpleness, preparation and schooling of comptrollers in the system from the really beginning and a wide acquaintance of all accounting and revenue enhancement professionals in the format.
Comparison of Gallic Accounting with UK and USA
The accounting systems in states have remained well different. The accounting professional of one state are expected to undergo significant preparation and base on balls transition scrutinies before being allowed to pattern in their profession in another state. Requirement for qualified hearers are more rigorous in France and UK so in USA.
In France, the authorities sets the criterion, while in UK and US accounting organic structures determine the formats and processs. The rising prices accounting is besides different in all three states. In France the directors could confront prosecution if the company they manage goes bankrupt while US and UK directors have to be found deceitful to confront the same destiny. Gallic system does non pattern deferred revenue enhancement while the other two have this proviso.
Benefits of Harmonization
France is a portion of EEC and it is of import for members of a individual economic community to hold unvarying accounting processs. An International Financial Reporting Standard ( IFRS ) is now being used for advancing harmoniousness in international accounting. EEC has been at the head of IFRS and all member provinces were expected to conform to this criterion by 2005 [ Ernst & A ; Young, 2005 ] .
An international harmonisation in accounting would be good in the planetary economic system. Multinational corporations will profit from uniformity of fiscal accounting and coverage. The international investor will besides profit from the common nomenclature and accounting patterns.
Developed states have evolved an progress system of accounting best suited to their demands. They can truly be proud of these systems. The job is that a sense of pride in their accounting system is likely to be a major hurdle in any effort to harmonise the processs.
Harmonization of Gallic Accounting with EEC Policies
In line with the duty of EEC member province and France’s ain desire to advance international harmonisation in fiscal accounting, the state has started modifying its accounting system to convey it in line with EEC directives and besides of International Accounting Standard Committee ( IASC ) .
The EEC ordinance known as 4Thursdaydirective on Company Law Harmonization brought the 1982 PCG. This was followed by 7ThursdayEEC Directive obliging the EEC companies to fix their amalgamate histories under the set of regulations laid in the 7ThursdayDirective. The Gallic authorities introduced a new chapter to the 1982 PCG to suit the new regulation in the Gallic accounting regulations.
The new PCG assembles chart into 9 groups. The first figure in the codification identifies the group. The 2nd figure is for the leger model while three more figures complete the codification for other caputs within the chief class. The accounting caputs are [ Roberts, 2003 ] :
- Equity, commissariats and non-current liabilities
- Non-current assets
- Personal histories
- Fiscal histories
- Particular histories ( optional )
- Management histories ( optional )
The new PCG complies with the EEC directives. The Gallic fiscal accounting and coverage system has been able to travel with the demands of times and it is certain that parts of this convenient chart accounting system, which are besides common with the US Generally Acceptable Accounting Procedures ( GAAP ) will be incorporated in the International Accounting Standard.
Although both UK and France are now following the new EEC directives there are still important differences in the Gallic and British fiscal accounting and coverage system. [ Jones & A ; Samar-Fauchon, 2001 ] have carried out a elaborate analysis of the chief differences between the UK and Gallic accounting patterns. They point out that the differences in histories consolidation, associated and joint ventures accounting, accounting for concern combination, touchable and intangibles assets accounting, income revenue enhancement, employee benefit accounting and capital and portions accounting were still well apart. The IASC and EEC have to make significant work to hold a system, which can be loosely similar to accomplish their purpose of harmonisation of accounting patterns.
International accounting systems differ a batch from each other. Gallic fiscal accounting and coverage system has evolved over the last three hundred old ages. The beginning of the present chart based signifier can be traced to 1927. The system has evolved over the old ages ensuing in Gallic system going one of the most powerful and utile accounting systems in the universe.
The planetary economic system is prefering a unvarying fiscal accounting and coverage system. France being a member of EEC is taking the thrust to harmonise accounting criterions ab initio within EEC and as future mark aid in germinating an international accounting system.
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