Balance sheet truth

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Economic reality is the accepted principles of accounting BASED design principle in accounting , the (content) on the material accuracy, completeness and arbitrary freedom of financial statements targeting.


The question of the concept of truth is one of the central problems of philosophy and has been answered differently by the most diverse schools and thinkers. The sciences use observer independence as a criterion for truth or - according to a more modern concept - the consistency of what is observable. The truth of the balance sheet can only be approached in this sense if one takes into account the influencing factors under commercial and accounting law. In Germany there are extensive accounting and valuation options under commercial and tax law , which contradict an absolute balance sheet truth. Absolute truthfulness of the balance sheet would mean that the annual financial statements reflect the company's relationships as they actually appear on the balance sheet date. This is prevented by applying the strict lowest value principle . It requires that the actual acquisition or production costs of an asset must be recognized if the value available on the balance sheet date is higher. Conversely, the acquisition or production costs are insignificant if the relevant reference date value is lower ( Section 253 Paragraphs 3 and 4 HGB ). Because of the large number of such valuation options, one can only assume a relative balance sheet truth.

Criteria of the balance sheet truth


The principle of correctness ( Section 239 (2) HGB) is fulfilled if the annual financial statements have been drawn up in accordance with the applicable statutory regulations and the values ​​and valuations can be derived in a verifiable, objective form from proper documents and books. The individual items must correspond to the facts and the values ​​must have been determined in accordance with the other principles of proper accounting. According to Section 264 (2) of the German Commercial Code (HGB), the annual financial statements of corporations must give a true and fair view of the asset, financial and earnings position in accordance with the principles of proper bookkeeping.

The annual accounts must

  • be derived from correct basic records,
  • reflect the underlying economic facts,
  • contain valuations according to the statutory provisions,
  • list all business transactions in full and
  • bring about the compilation of all items to a correct report of the annual success.

However, the criterion of correctness only receives concrete content through the individual legal / tax standards belonging to the system of standards for bookkeeping and financial statements.


Under the principle of completeness ( § 246 para. 1 HGB), all relevant transactions transactions, ie all assets , liabilities , prepaid expenses and expenses and income recognized in the financial statements. In addition, changes that are not recognizable as business transactions, such as shrinkage and spoilage, must also be recorded in the accounting and annual financial statements. In addition to incidents that require accounting, risks that have not yet been reflected in the accounting by the balance sheet date must also be taken into account ( provisions and value adjustments ).

The requirement for completeness includes

  • annual recording of the actual stocks through inventory ( § 240 HGB),
  • intensive price observation on the markets in order to take negative price developments into account,
  • Observation and analysis of all relevant risks in order to be able to take them into account in the annual financial statements.

Accounting companies must provide the auditor with proof of completeness.


If the company preparing the balance sheet is given discretion, it may only be used according to the principle of freedom of choice after a reasonable commercial assessment . They must be applied permanently with established and verifiable procedures. If it is unavoidable (as with provisions and value adjustments), estimated values ​​are to be determined at one's own discretion. These, too, should be as arbitrary and justifiable as possible and consistently applied according to established procedures. The valuation of assets is arbitrary if they have been significantly overvalued in a commercially unjustifiable manner. If the granted discretion is left, there is arbitrariness, which can lead to the invalidity of the annual financial statements.

Conflict of interest

The truth of the balance sheet is in conflict with the principle of commercial prudence to be observed in accounting , the entrepreneurial interest in the secrecy of certain operational processes and the public's right to information from public companies. Walb had already recognized this area of ​​tension in 1935: “The main focus of the problem of balance sheet truth is to find the right balance between a legitimate interest in secrecy and the equally legitimate interest in openness”.

See also


  • Carl Zimmerer: The balance sheet truth and the balance sheet lie , 2nd edition, Wiesbaden 1981, ISBN 3-409-96542-4 .

Individual evidence

  1. RG, judgment of January 25, 1939 II 94/38
  2. Brigitte Knobbe-Keuk: Accounting and Corporate Tax Law , 1993, p. 55
  3. Hans Hermann Walb: Balance sheet truth and hidden reserves , 1935, p. 3