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Some mysteries relating to the prudence principle in the Fourth Directive and in German and British law

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  • Lisa Evans
  • Christopher Nobes

Abstract

Article 31 of the Fourth Directive, which specifies the general valuation principles to be applied in the preparation of financial statements, shows a difference in emphasis between the different language versions. Except for the English version of the Directive, all others emphasize prudence, as opposed to the other valuation principles required by the article. The earlier drafts of the Directive are examined in an attempt to trace the development of this difference between the English and the other language versions. It seems that the particular wording of Article 31 with its relatively greater weight on prudence probably results from UK influence, more specifically from SSAP 2. A possible solution is then suggested as to why this particular emphasis on prudence was not retained in the English version of the Directive. Further, it is noted that German law did not explicitly make prudence an overriding concept before the Fourth Directive and nor does the German implementation of Article 31.

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  • Lisa Evans & Christopher Nobes, 1996. "Some mysteries relating to the prudence principle in the Fourth Directive and in German and British law," European Accounting Review, Taylor & Francis Journals, vol. 5(2), pages 361-373.
    • Handle: RePEc:taf:euract:v:5:y:1996:i:2:p:361-373
    DOI: 10.1080/09638189600000021
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    Cited by:

    1. Lisa Evans & Rachel Baskerville & Katariina Nara, 2015. "Colliding Worlds: Issues Relating to Language Translation in Accounting and Some Lessons from Other Disciplines," Abacus, Accounting Foundation, University of Sydney, vol. 51(1), pages 1-36, March.
    2. Schanz, Deborah & Schanz, Sebastian, 2009. "Zur Unmaßgeblichkeit der Maßgeblichkeit: Divergieren oder konvergieren Handels- und Steuerbilanz?," arqus Discussion Papers in Quantitative Tax Research 78, arqus - Arbeitskreis Quantitative Steuerlehre.
    3. Axel Haller, 2002. "Financial accounting developments in the European Union: past events and future prospects," European Accounting Review, Taylor & Francis Journals, vol. 11(1), pages 153-190.
    4. Claudia Catalina CIOCAN & Iuliana GEORGESCU & Mihai CARP, 2020. "The Perception of the Representatives of the Accounting Profession from Romania on the Relationship Between Conservatism and True and Fair View," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 18(159), pages 585-585.
    5. D'Amico Luciano, 2007. "L’armonizzazione dei principi contabili," wp.comunite 0016, Department of Communication, University of Teramo.
    6. Henselmann, Klaus & Meier, Elena, 2021. "The History of Accounting in Germany - Transposition of Accounting Directives," EconStor Preprints 248386, ZBW - Leibniz Information Centre for Economics.
    7. Sally Aisbitt, 2002. "Harmonisation of financial reporting before the European Company Law Directives: the case of the Nordic Companies Act," Accounting and Business Research, Taylor & Francis Journals, vol. 32(2), pages 105-117.

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