Yet more misconceptions concerning the ‘uniformity’ of German financial reporting

Abstract

This paper consists of comments on the replies made by Nobes and Mueller (1997) to Feige's (1997) critique of their accounting classification models. It is argued here that Nobes' and Mueller's assumption that the German Handelsge-setzbuch covers most contentious financial reporting issues ‘in detail’, is not correct. This applies in particular to consolidated accounts which are an important element of German financial reporting practice. Foreign currency translation, if used for testing a classification model, is therefore no ‘outlier’, as argued by Nobes and Mueller. Nobes' and Mueller's idea that German financial reporting practice can be described as ‘uniform’ because of ‘accounting charts' is not compelling, since the ‘Industriekontenrahmen’ (IKR) which Nobes and Mueller apparently have in mind, merely serve the purpose of providing non-compulsory frameworks for the process of ‘orderly bookkeeping’. The IKR's do not lead to ‘uniformity’ of the more highly aggregated data published in annual reports. In addition, it would appear that the classification models by Nobes and Mueller lack a theoretical background, i.e. there is no theory to be tested in conjunction with them. In view of this shortcoming of their own models, the bold statements of Nobes and Mueller concerning the scientific soundness of some classifications in the natural sciences appear particularly questionable.