Overall conclusion
In the accounting of the new municipal financial management, the overall financial statements are the public law equivalent of the consolidated financial statements under commercial law .
General
The municipal group represents a fictitious association of public and private law organizations under the leadership of a municipality as the parent company . In the course of the consolidation , the information from the annual financial statements of the municipality and its municipal companies are merged into one consolidated (annual) financial statement.
Legal basis according to federal states
Most of the municipal codes of the federal states provide for the preparation of overall financial statements. However, consolidation only takes place in municipalities whose budget and accounting are kept in the form of double- entry bookkeeping . Since the budget and accounting of the municipalities is determined by the respective state law, the requirements for the preparation of the overall financial statements sometimes differ significantly from each other.
| state | regulation | initial listing | Notice period |
|---|---|---|---|
| Baden-Württemberg | Section 95a GemO BW | for the first time for the budget year 2022 | within nine months of the end of the budget year |
| Bavaria | Art. 102, 102a GO | to be drawn up from the fifth budget year following the budget year in which the budgetary management system was introduced according to the principles of double municipal accounting by the respective municipality | within six months (annual financial statements) or ten months (consolidated annual financial statements) after the end of the financial year |
| Brandenburg | § 83 BbgKVerf | by 2024 at the latest | to be set up by December 31 of the following year |
| Hamburg | Section 78 LHO | first compilation for the financial year 2007 | on time in the next accounting year |
| Hesse | Section 112 HGO | first line-up for 2015 | within nine months of the end of the financial year |
| Mecklenburg-Western Pomerania | Section 61 KV-MV | by 2024 at the latest | within nine months after the end of the financial year, right to choose between the overall financial statements and the participation report, compulsory disclosure only for urban districts and large district-related cities |
| Lower Saxony | Section 128 NKomVG | mandatory for the first time in 2013 for the 2012 budget year | within nine months of the end of the budget year |
| North Rhine-Westphalia | §116 GO NRW | for the financial year 2010 at the latest | within the first nine months after the reporting date |
| Rhineland-Palatinate | § 109 GO RLP | initial list for the 2015 financial year | within eleven months of the end of the financial year |
| Saarland | Section 100 KSVG | first compilation for the 2014 financial year | within nine months of the end of the financial year |
| Saxony | § 88a SächsGemO | no later than the budget year 2021 | within six months of the end of the budget year |
| Saxony-Anhalt | Section 119 KVG LSA | first compilation for the 2016 financial year | within 18 months of the end of the budget year |
| Schleswig-Holstein | § 95o GO SH | Up to and including 2018 and for the first five annual financial statements in accordance with Section 95m GO, the list is not required | within nine months of the end of the financial year |
| Thuringia | § 20 ThürKDG | at the latest for the third budget year in which the books were kept for the first time according to the double-entry bookkeeping rules for municipalities | within ten months of the end of the financial year |
Components of the overall financial statement
The presentation of individual components of the overall financial statement, such as the overall balance sheet, the statement of comprehensive income and the overall financial statement, is carried out in accordance with the requirements of the respective applicable budgetary regulation of the federal state concerned. The minimum breakdown of the overall balance sheet is specified either directly by the current financial regulation or by administrative regulations. In terms of their presentation, the overall balance sheet and the statement of comprehensive income largely correspond to the balance sheet / asset statement and the statement of results of the municipal annual financial statements. The breakdown is supplemented by items relevant to the consolidation, such as the difference from capital consolidation or goodwill. The overall financial statement is broken down in the form of cash flow statements based on DRS 2 . The scope and content of the annex to the overall financial statements, as well as the consolidation or management reports, are also determined by the respective financial regulation. The overall financial statements are also supplemented by consolidated annexes with detailed overviews. The attachments include the overview of the total assets, the total receivables and the total liabilities.
Scope of consolidation
By referring to the commercial code in the municipal ordinances / constitutions , the preparation of overall municipal financial statements is largely determined by the control concept anchored in commercial law. A municipality is therefore obliged to provide a list if it can exercise a controlling influence on one of its subsidiaries within the meaning of Section 290 HGB. Compared to the commercial reference model not only classical to investments or corporations considered part of the local group, but also public-sector companies and other forms of organization, such as the municipal public institution , purpose associations , municipal enterprises , run utilities or other special funds . The scope of the companies belonging to the municipal group is usually specifically determined in the municipal ordinances / constitutions. Subsidiaries that are directly or indirectly controlled by the municipal parent company are included in the scope of consolidation in the narrower sense and are fully included in the overall financial statements (full consolidation). The municipal scope of consolidation in the broader sense includes joint ventures and associated companies , which are accounted for in the overall financial statements using the equity method with an amortized equity value . The municipal budget and accounting system does not yet provide an option for the partial collection of joint ventures according to Section 310 HGB. Size-dependent exemptions for the preparation of the overall financial statements based on Section 293 of the German Commercial Code (HGB) were anchored in the municipal ordinances / constitutions by different provisions. In Saxony-Anhalt, for example, there is no obligation to prepare the overall financial statements if the total assets of the subsidiary units to be included do not exceed 20% of the reported total assets of the municipality. Other municipal ordinances / municipal constitution, on the other hand, completely dispense with such regulations. In addition to size-dependent exemptions, there are regulations that limit the need to include individual subsidiary units in the overall financial statements and thus their consolidation due to their importance for the municipality's asset, financial and earnings position. To regularly review the importance of their subsidiary units, municipalities formulate corresponding value limits in their overall financial statements.
Preparation and standardization
The communal group is viewed as a fictitious legal and economic unit in the sense of the unit theory. All assets and debts of the municipal group are to be accounted for in accordance with the accounting regulations of the group parent. In detail, this means that the reporting of items, the accounting treatment of assets and liabilities and their valuation for the municipality and its subsidiaries must first be standardized at the level of changeable individual financial statements. The standardization usually takes place in several successive steps. Adjustments with regard to the structure of the annual financial statement items are initially achieved through an account mapping of the individual financial statements. All standardization measures generally relate to the controlled subsidiaries of the municipality, which are included in the overall financial statements as part of full consolidation.
Mapping
The communal group units mostly use different accounts in their bookkeeping due to communal and branch-specific regulations . The individual accounts from the individual charts of accounts of the municipality and its municipal companies must therefore be assigned to the items in the overall balance sheet and statement of comprehensive income. After the assignment, it is possible to add up all the invoices to form a total calculation (also known as a total balance sheet). Adjustment postings or consolidation postings can then be made for the group on the basis of the totals calculation. The requirements for account mapping become clear due to the widely differing charts of accounts and different approach rules within the municipal group. Pursuant to Section 312 (5) of the German Commercial Code (HGB), any adjustments to associated companies are not necessary.
Approach and evaluation
The inclusion of assets and debts, prepaid expenses as well as income and expenses takes place in the overall municipal financial statements in accordance with Section 300 (1) sentence 2 of the German Commercial Code. The items of the subsidiaries can only be included in the overall financial statements insofar as "the law of the parent company does not prohibit accounting or an accounting option". The budgetary requirements for accounting and valuation by the municipalities therefore primarily apply to the overall financial statements. Due to the differences in content between the accounting law of the municipalities and the commercial law regulations, the recognition of certain items in the balance sheet must first be checked and, if necessary, adjusted for the overall financial statements. The following differences in approach can occur when including municipal subsidiaries, for example:
| Budget law | Commercial law |
|---|---|
| Accounting for investment funds received as a special item on the liabilities side of the balance sheet | no explicit regulations |
| Accounting for investment subsidies made in intangible assets | Accounting for investment subsidies made as prepaid expenses |
| Ban on accounting for self-created intangible assets | Activation option for self-created intangible assets |
| Update of financial assets (equity mirror method) | Prohibition of exceeding the acquisition and production costs as a valuation upper limit |
| Formation of provisions for pension obligations when including pension funds | Ban on accounting for the formation of provisions for pension obligations when including pension funds |
| Presentation of income and expenses relating to other periods in the ordinary result | Presentation of income and expenses relating to other periods in the extraordinary result |
By referring to Section 308 of the German Commercial Code (HGB) in the municipal regulations / constitutions , the assets and debts of the subsidiaries included in the overall municipal financial statements are to be valued uniformly in accordance with the accounting regulations of the municipal parent company. Insofar as the municipal budget and bookkeeping regulations exist, valuation options can be exercised in the overall financial statements. If the assets and debts of the units included were valued differently, they must be reassessed for the overall financial statements.
| Budget law | Commercial law |
|---|---|
| Valuation with acquisition or production costs | Offsetting of assets with fair value |
| Discounting of provisions for old age pensions using the entry age method with an interest rate of 5% | Discounting of provisions for old-age pensions with a flat market interest rate |
| Straight-line depreciation, other depreciation methods are only permitted in exceptional cases | Depreciation according to commercial assessment |
Full consolidation
In the course of full consolidation, all assets and debts of the municipality and its subsidiaries are transferred to the municipal group in the sense of a fictitious acquisition process. For the respective budget and financial year, all opening values, movements and closing balances of the annual financial statements items for the respective budget and financial year are transferred. The result of the takeover is a total balance sheet and a total income statement for the municipal group. Due to the fact that the municipality has control over its subsidiaries, all assets and debts must always be included in the overall financial statements in the case of full consolidation. If other shareholders are involved in the subsidiary, their shares are shown separately within the group's equity . Details of the full consolidation are set out in corresponding references in the municipal ordinances / constitutions to Sections 300 to 309 of the German Commercial Code .
Capital consolidation
When a subsidiary is included in the overall financial statements for the first time, the shares held by the municipality are offset against the equity items of the subsidiary included. The capital consolidation ensures that the asset and debt items can be included in the overall financial statements in the sense of a fictitious acquisition.
Section 301 of the German Commercial Code currently provides for the so-called revaluation method for the consolidation of equity. Due to the change in commercial law through the Accounting Law Modernization Act (BilMoG) in 2009, the previously possible application of the book value method as an alternative consolidation method was repealed. Since the consolidation of the equity of municipal subsidiaries is determined nationwide by budget law through (static or dynamic) references to Section 301 HGB, hidden reserves and burdens should be uncovered duringthe initial consolidation. The hidden reserves and burdens discovered are to be updated in the overall financial statements in the following years. With regard to the treatment of hidden reserves and burdens in the overall municipal financial statements, different approaches have developed in the federal states. The Lower Saxony Municipal Constitutional Act, for example, fundamentally rules out disclosure. In the implementation notes of other federal states, however, reference is made to a possible subordinate importance of hidden reserves and burdens in the overall financial statements.
The capital consolidation takes place on the reporting date of the first-time inclusion of the subsidiary in the municipal group. The equity of the subsidiary is offset against the value of the shareholding held by the municipality. As a rule, there are differences between the equity of the subsidiary and the value of the investment. These are shown as active or passive differences in the overall balance sheet. Active differences are shown as goodwill in the overall balance sheet in accordance with Section 301 (3) HGB . Insofar as the differences arise on the liabilities side, these are to be shown as the difference from the capital consolidation in the overall balance sheet. In accordance with Section 309 (1) of the German Commercial Code (HGB), goodwill is to be written off in subsequent years. Differences from the capital consolidation can acc. Section 309, Paragraph 2 of the German Commercial Code (HGB).
Debt consolidation
When consolidating debt in accordance with Section 303 of the German Commercial Code, liabilities , provisions , receivables , loans and prepaid expenses , which exist between the municipality and the subsidiaries, are to be omitted. After reconciling the individual consolidation amounts, consolidation postings are made at the account level of the totals balance sheet. The internal debt relationships between the group units are offset against each other or eliminated.
Since the municipal subsidiary units involved sometimes apply widely differing accounting requirements in their annual financial statements and can exercise options in different ways, correction and adjustment postings at the level of the individual financial statements to be included are usually unavoidable. So-called real offsetting differences arise, for example, from accounting for tax provisions at subsidiaries that are not countered by any corresponding claims on the part of the municipality. Real offsetting differences can be eliminated by reversing the creation of the relevant item at the level of the individual financial statements. Inaccurate offsetting differences arise from posting errors or from periodic deviating postings in the group units. Insofar as the booking errors were recognized early on, they must be corrected in the individual financial statements of the subsidiary unit. The correction is made, depending on the nature of the underlying business transaction, as a posting affecting profit or not affecting profit.
Insofar as the consolidation of debt relationships is of subordinate importance for the presentation of a true and fair view of the asset, financial and earnings position, this can be dispensed with ( Section 303 (2) HGB). Insofar as debt relationships are not consolidated, this must be stated in the notes to the overall financial statements.
Elimination of intercompany results
In the municipal group, intercompany profits and losses arise from the sale of assets between the municipality and its subsidiaries. An interim profit arises if the proceeds from the sale of an asset at the time of sale are above the book value in the balance sheet . An interim loss arises if the proceeds from the sale of the asset in question are below the book value at the time of sale. Since the group is viewed as a legal and organizational unit, the interim results must be consolidated. Intercompany profits are adjusted by reducing the acquisition or production costs of the asset by deducting the income from the sale of assets. Intermediate losses are adjusted by increasing the acquisition or production costs of the asset by deducting the expenses from the sale of assets. The aim of eliminating intercompany results is to restore the original acquisition and production costs of the asset in question and to correct the effect of the sale on profit or loss.
Insofar as the consolidation of the interim results is of subordinate importance for the presentation of a true and fair view of the asset, financial and earnings position, this can be dispensed with ( Section 304 (2) HGB). If interim results are not consolidated, this must be stated in the notes to the overall financial statements.
Income and expense consolidation
Success relationships between the group units are to be consolidated in accordance with Section 305 HGB. The income and expenses from the mutually existing service relationships of the group units are offset against each other. Before the offsetting can take place, the items in the municipal income statement and the profit and loss accounts of the subsidiaries are added together to form a total income statement . Subsequently, the group-internal income and expenses are offset against each other at the account level. The result of the consolidation entries is the statement of comprehensive income for the municipal group.
The income and expense consolidation requires a comparison of the balances of individual profit-making relationships of the group units. Ideally, after the balance comparison, the income and expenses of the budget and fiscal year are the same amount. Differences can, however, arise from periodically different postings or from the different tax treatment of income and expenses in the group units.
Equity method
Municipal group units on which the municipal group has a significant influence, such as associated companies and joint ventures , are shown in the overall financial statements using the equity method . The procedure is carried out on the basis of the corresponding references in the municipal ordinances / local government constitutions of the states to § § 311 HGB and § 312 HGB. If active or passive differences were determined in the course of the initial determination of the equity value, these must be disclosed and explained in the notes to the overall financial statements . In the course of the annual update of the equity value, active differences are written off in accordance with Section 309 (1) HGB. Insofar as negative differences arose during the initial equity valuation, these can be released to profit or loss in accordance with Section 309 (2) HGB, provided that this corresponds to the principles of proper group accounting ( Section 297 HGB and Section 298 HGB).
Pursuant to Section 312 (4) of the German Commercial Code, the equity value of the group unit “is to be increased or decreased in subsequent years by the amount of the changes in equity that corresponds to the shares in the capital of the associated company belonging to the parent company; Profit distributions attributable to the participation are to be deducted ”.
The equity valuation is carried out accordingly in the following years, taking into account the proportionate annual results, changes in capital and the active and passive differences determined during the initial valuation. The changes in value determined are recorded in the statement of comprehensive income by increasing / decreasing the equity value and under income from associated companies.
| Baseline | Equity value on January 1st |
|---|---|
| Regular updates |
+ proportionate annual surplus |
| Unscheduled update |
- Extraordinary depreciation |
| Final value | = Equity value on December 31st |
Overall closing guidelines
The preparation of the overall financial statements is determined by the municipal budget law and the commercial code. The municipalities should specify details of the implementation of the list in so-called overall financial statements or consolidation guidelines. The overall financial statements guidelines can contain provisions for the accounting implementation of the consolidation as well as organizational rules. The main contents of an overall closing policy can be, for example:
| Regulatory area | Provisions |
|---|---|
| Scope of consolidation |
|
| Preparatory actions |
|
| Consolidation |
|
| Overall closing components |
|
| Mandatory templates and forms |
|
literature
- Christoph Lehmitz, Christian Kamp: The municipal overall conclusion: Consolidation in the double. Wiley-VCH Verlag GmbH & Co. KGaA, Weinheim, 2012. ISBN 978-3527506378
- Christoph Lehmitz: The overall municipal accounts in the state of Brandenburg: Outline of a consolidation guideline. Grin-Verlag, Munich, 2009. ISBN 978-3640483815
Web links
- Overall financial statements - solutions in comparison on www.kommune21.de , article from July 4, 2017
- Overall municipal financial statements - complex task on www.kommune21.de , article from June 30, 2016
- The best way to complete municipal financial statements at www.ipm.berlin , KBW conference on municipal finances , lecture on May 19, 2017
- Overall closing - a lot of work for a pile of paper? at www.ipm.berlin , Long Administrative Night, lecture on October 5, 2017
- The overall municipal accounts at www.ipm.berlin , BAG-KOMM Federal Congress in Potsdam, lecture on June 14, 2010
- Guidelines of the project group “municipal overall accounts ” Brandenburg at www.doppik-kom.brandenburg.de , Brandenburg Ministry of the Interior, August 31, 2012
- Final project report on the NKHR overall report at www.statistik.sachsen-anhalt.de , Ministry of the Interior and Sport of the State of Saxony-Anhalt, February 25, 2014
- Results of the work group for the overall financial statements on www.mi.niedersachsen.de , Lower Saxony Ministry of the Interior and Sport, June 1, 2012
Individual evidence
- ^ Municipal code of Baden-Württemberg (GemO BW)
- ↑ Municipal Code for the Free State of Bavaria (GO)
- ↑ Municipal constitution of the state of Brandenburg (BbgKVerf)
- ↑ Circular from the Ministry of the Interior of Brandenburg of January 17, 2018
- ↑ Financial Regulation of the Free and Hanseatic City of Hamburg (LHO HH)
- ↑ See § 80, Paragraph 1 LHO HH
- ↑ Hessian municipal code (HGO)
- ↑ Municipal constitution for the state of Mecklenburg-Western Pomerania (KV-MV)
- ↑ Lower Saxony Municipal Constitutional Law (NKomVG)
- ↑ Municipal Code of North Rhine-Westphalia (GO NRW)
- ↑ Municipal Code of Rhineland-Palatinate (GO RLP)
- ↑ Saarland Municipal Self- Administration Act (KSVG)
- ↑ Municipal Code for the Free State of Saxony (SächsGemO)
- ↑ Local Constitutional Law of the State of Saxony-Anhalt (KVG LSA)
- ^ Municipal code for Schleswig-Holstein (GO SH)
- ↑ Thuringian law on municipal double-entry law (ThürKDG)
- ↑ See Section 119 (2) KVG LSA
- ↑ See § 83 BbgKVerf
- ↑ See point 3.4.6 - The consolidated annual financial statements (overall financial statements) of the municipalities in the state of Brandenburg. Guideline of the project group "Municipal Comprehensive Accounts" from August 31, 2012
- ↑ Different accounting rules in the federal states
- ↑ See section 311 IDW HFA 2/1996
- ↑ See § 33 Paragraph 7 GemHVO Doppik MV
- ↑ With widely differing form of the regulations of the federal states for the formation of pension provisions.
- ↑ Representation from 01.01.2016 according to Accounting Directive Implementation Act (BilRUG) repealed in the profit and loss account.
- ↑ See Section 246 (2) sentence 2 HGB
- ↑ As far as these could be identified in the course of the initial valuation of the associated company.
