Abstract
German accounting has traditionally followed a dual ledger approach with strictly separated internal cost accounting, as the basis for management information, and external financial accounting focusing on creditor protection and based on the commercial law. However, the increased adoption of integrated accounting systems implies a significant change in the relationship between financial and management accounting systems. We use Hegelian dialectic to trace the historical development of German accounting from separated systems and antithetical propositions of full integration, to the emergence of partial integration as the synthesis of this transformation process. The foundation of our paper is a comprehensive analysis of the literature on the relationship between financial and management accounting in Germany. On this basis, we elaborate how financial accounting in Germany has been shaped by its economic context and legislation, and how financial accounting – accompanied by institutional pressures – in turn influenced management accounting. We argue that the changing relationship between management and financial accounting in the German context illustrates how current accounting practice is shaped not only by its environment, but also by its historical path. Based on this reasoning, we discuss several avenues for future research.
Highlights
This paper provides a literature-based narrative on the relationship between management accounting and financial accounting in Germany from the late 19th century to the early 21st century
Reflecting accounting historians’ interest in the development of accounting in specific country contexts (Carnegie and Napier, 2002), our analysis adds to the understanding of how the dual ledger accounting approach – a characteristic feature of the German accounting systems that prevailed for decades (Jones and Luther, 2005; Ewert and Wagenhofer, 2007) – emerged and evolved towards a “partial integration of accounting systems” (Weißenberger and Angelkort, 2011)
Synthesis: Partial integration of accounting systems In Section 3 we have argued that the integration of accounting systems represents an antithesis to the dual ledger accounting approach that was driven by economic developments and institutional pressures
Summary
This paper provides a literature-based narrative on the relationship between management accounting and financial accounting in Germany from the late 19th century to the early 21st century. In line with prior literature (e.g., Granlund and Lukka, 1998; Rodrigues and Craig, 2007), we argue that economic and institutional pressures contributed to the emergence of a thesis, an antithesis and a synthesis concerning the relationship between financial and management accounting In this context, institutional pressures comprise coercive forces (i.e., regulation), normative pressures (i.e., obligations and suggestions arising, for instance, from professional organizations or universities) and mimetic forces (i.e., organizations emulate peers by adapting particular structures). The literature emphasizes that the German financial accounting standards (as codified in the German code of commercial law, the “Handelsgesetzbuch” (HGB)) constitute the major basis for this view (Ewert and Wagenhofer, 2007) and the corresponding dual ledger approach that found its way into German business practice in the late 19th century (Weißenberger, 2003; Trapp, 2012b). The mandatory guidelines and charts of accounts represented channels that disseminated academic ideas into corporate practice during the first half of the 20th century
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