Law Conforming? – Legal Basis
Basically, the question is if effect accounting and Value Balance could violate the law or if accounting fraud was committed. As per the following points, it can be understood that Value Balance and effect accounting comply with every point of the legislation. We even believe that traditional balance sheets, to some extent, do not comply with these laws. Commercial enterprises externalize their costs, for example to compensate for ecological consequences and those to the environment.
The principles of sustainability are not met in this manner. (Completeness and correctness) We also do not believe that balance sheets, in general, comply with the law of truthfulness, since they do not convey a true and fair representation of assets and liabilities, financial position, and corporate performance in an enterprise. An amazing discovery.
Below are the foundations and principles that are relevant here.
Generally Accepted Accounting Principles
Principle of Clarity (transparency and verifiability)
An expert third party should be able to find their way around bookkeeping, within reasonable time, to get an overview of the enterprise’s accounting transactions and financial status (art. 238 of the HGB). Modifications must be recognizable (art. 239 of the HGB).
Principle of Completeness
All required records must be kept in full, correctly, in a timely fashion, and tabulated (art. 239 of the HGB).
Principle of Correctness
Factual and correctly calculated records of all accounting transactions (art. 239 of the HGB).
No booking without a voucher! All accounting transactions must be traceable at their origin and through their processing (art. 238 of the HGB). Voucher filing must allow for quick location and tracing of transactions (from booking to voucher and vice versa). Record keeping (art. 257 of the German Commercial Code, HGB)
Principle of Compliance
Prompt and chronological booking (art. 239 of the HGB).
Generally Accepted Account Balancing Principles
Principle of Truthfulness of the Balance Sheet
Completeness of the annual financial statements as per art. 246 of the HGB. It conveys a true and fair representation of assets and liabilities, financial position, and corporate performance of an enterprise.
Principle of Clarity of the Balance Sheet
The annual financial statement must be clear and transparent (art. 243 of the HGB)