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offene Wahlrechte

English translation: measurement options

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14:43 Mar 23, 2007
German to English translations [PRO]
Bus/Financial - Accounting
German term or phrase: offene Wahlrechte
Soweit in neueren IFRS offene Wahlrechte für die Bewertung bestimmter Sachverhalte enthalten sind, werden diese in eine Benchmark-Methode und eine oder mehrere alternativ zulässige Methoden differenziert.

MT.
markj
English translation:measurement options
Explanation:
i.e. the "benchmark method" and "one or more allowed alternative treatments". However, the term "measurement option(s)" does not itself appear in IFRSs.

Three points, though: first, an equivalent English term to "offene Wahlrechte" simply doesn't appear in IFRSs. I must say that "offenes Wahlrecht" sounds very HGB/GoB to me in any case.

Second, IFRSs use the term "election" to refer to optional accounting treatments, but *not* in the context to which your paragraph refers (benchmark and allowed alternative treatments).

Third, the IASB has been working towards eliminating the concept of "benchmark" and "allowed alternative" treatments, which have been removed from a number of earlier IASs and do not appear in any of the newer numbered IFRSs. So I would say there's an error of substance in your German paragraph.

--------------------------------------------------
Note added at 6 hrs (2007-03-23 20:53:37 GMT)
--------------------------------------------------

Although the source given by "Shesaid" is Swiss, rather than German, the same principles apply: "offenes Wahlrecht" isn't an IFRS concept, but originates in the murky, prescriptive swamp of German rule-based accounting (note the use of the term "Vorschriften", even though the only "rules" in IFRSs are in IAS 32 and 39, taken over from US GAAP).

Some comments on the Zurich thesis:

"Einerseits ist in den Standards keine klare Definition des Erfolges zu finden."

Really? Profit is defined in F.107, F.107 as:
'The residual amount that remains after expenses (including capital maintenance adjustments, where appropriate) have been deducted from income. Any amount over and above that required to maintain the capital at the beginning of the period is profit.'

That's clear enough, I think.

"Es gibt keine Vorschriften darüber, welche Erträge und Aufwendungen in einem Zwischentotal enthalten sein müssen."

Well, that's what happens when you go for principles-based standards, rather than rules like FER or HGB.

"Andererseits reduzieren ... den Informationsgehalt des Erfolges zusätzlich."

Says who? Dear me, not even a "m.E." or "es wird vermutet, dass". Swiss student absolutism can be a very dangerous thing, especially when being held up as a reliable source, I think... :-)

--------------------------------------------------
Note added at 1 day4 hrs (2007-03-24 19:08:45 GMT)
--------------------------------------------------

Further to Kieran's tip about "verdeckte Wahlrechte", I researched this further. This whole thing about "offene" and "verdeckte" Wahlrechte in IFRSs seems to be limited to academics in a fairly obscure branch of German accounting theory (backwater?), as it's most certainly not in Baetge (I checked, and as they say, if it ain't in Baetge, it ain't worth diddly).

To me at least, it adds further credence to my own thesis, as discussed in numerous presentations and workshops (whereby "Germany" is a proxy for the three main German-speaking countries) that:
- The IASB offers principles and guidance, but Germany wants rules
- The IASB requires the exercise of management judgement and common sense, but Germany wants legal certainty.

This is all part of the "culture clash" that has arisen from what some German accounting academics still call the "imposition" of the alien "Anglo-Saxon" IASs/IFRSs on the pure, German school of accounting. Hah!

Based on the references to "verdeckte Wahlrechte", though, it would appear that "offene Wahlrechte" go beyond just measurement, so here's an alternative answer:

"explicit options"

as opposed to the "verdeckte Wahlrechte", which would be the "implicit options".

Of course, this too assumes that there such things as "Wahlrechte" and "options" in IFRSs/IASs, which there aren't. There are only "benchmark methods", "allowed alternative treatments" and "elections".

I bet markj wishes he'd never asked this one...
Selected response from:

RobinB
Germany
Local time: 18:39
Grading comment
Thanks to you both for your detailed answers.
4 KudoZ points were awarded for this answer

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Summary of answers provided
4 +1measurement optionsRobinB
4optional choicesShesaid


  

Answers


3 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5
optional choices


Explanation:
The German term "offene Wahlrechte", although used in connection with IFRS, does not relate specifically to accounting questions, but rather denotes open instead of limited choices (for or against certain accounting treatments).

--------------------------------------------------
Note added at 3 hrs (2007-03-23 18:42:06 GMT)
--------------------------------------------------

Extract from executive summary of a diploma theses, univ. of Zurich:
quote
Einerseits ist in den Standards keine klare Definition des Erfolges zu finden. Es gibt keine Vorschriften darüber, welche Erträge und Aufwendungen in einem Zwischentotal enthalten sein müssen. Andererseits reduzieren offene Wahlrechte, unterschiedliche Wertmassstäbe wie historische Kosten oder Fair Value sowie die nicht einheitliche Lösung bei erfolgsneutraler respektive erfolgswirksamer Verbuchung von Vermögensveränderungen den Informationsgehalt des Erfolges zusätzlich. Bei der Bewertung nach dem Fair Value gibt es oft einen Bewertungsspielraum, den die Gesellschaften unterschiedlich ausnutzen können.
unquote

Example sentence(s):
  • To illustrate my point: see extract from ref below
Shesaid
Switzerland
Local time: 18:39
Specializes in field
Native speaker of: Native in GermanGerman
PRO pts in category: 7

Peer comments on this answer (and responses from the answerer)
neutral  RobinB: 1) Are there choices that aren't optional? 2) The para. in question refers specifically to the benchmark and AA treatments. 3) The Swiss German thesis summary you quote is at best highly contentious, at worst simply wrong! Sorry....
1 hr
  -> right, Robin, I thoroughly blundered with this one. But I insist on my suspicion that the terms "offen" and "verdeckt" should be looked at from a linguistic rather than accounting point of view. In a nutshell, I can live very well w/your final suggestions
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19 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +1
measurement options


Explanation:
i.e. the "benchmark method" and "one or more allowed alternative treatments". However, the term "measurement option(s)" does not itself appear in IFRSs.

Three points, though: first, an equivalent English term to "offene Wahlrechte" simply doesn't appear in IFRSs. I must say that "offenes Wahlrecht" sounds very HGB/GoB to me in any case.

Second, IFRSs use the term "election" to refer to optional accounting treatments, but *not* in the context to which your paragraph refers (benchmark and allowed alternative treatments).

Third, the IASB has been working towards eliminating the concept of "benchmark" and "allowed alternative" treatments, which have been removed from a number of earlier IASs and do not appear in any of the newer numbered IFRSs. So I would say there's an error of substance in your German paragraph.

--------------------------------------------------
Note added at 6 hrs (2007-03-23 20:53:37 GMT)
--------------------------------------------------

Although the source given by "Shesaid" is Swiss, rather than German, the same principles apply: "offenes Wahlrecht" isn't an IFRS concept, but originates in the murky, prescriptive swamp of German rule-based accounting (note the use of the term "Vorschriften", even though the only "rules" in IFRSs are in IAS 32 and 39, taken over from US GAAP).

Some comments on the Zurich thesis:

"Einerseits ist in den Standards keine klare Definition des Erfolges zu finden."

Really? Profit is defined in F.107, F.107 as:
'The residual amount that remains after expenses (including capital maintenance adjustments, where appropriate) have been deducted from income. Any amount over and above that required to maintain the capital at the beginning of the period is profit.'

That's clear enough, I think.

"Es gibt keine Vorschriften darüber, welche Erträge und Aufwendungen in einem Zwischentotal enthalten sein müssen."

Well, that's what happens when you go for principles-based standards, rather than rules like FER or HGB.

"Andererseits reduzieren ... den Informationsgehalt des Erfolges zusätzlich."

Says who? Dear me, not even a "m.E." or "es wird vermutet, dass". Swiss student absolutism can be a very dangerous thing, especially when being held up as a reliable source, I think... :-)

--------------------------------------------------
Note added at 1 day4 hrs (2007-03-24 19:08:45 GMT)
--------------------------------------------------

Further to Kieran's tip about "verdeckte Wahlrechte", I researched this further. This whole thing about "offene" and "verdeckte" Wahlrechte in IFRSs seems to be limited to academics in a fairly obscure branch of German accounting theory (backwater?), as it's most certainly not in Baetge (I checked, and as they say, if it ain't in Baetge, it ain't worth diddly).

To me at least, it adds further credence to my own thesis, as discussed in numerous presentations and workshops (whereby "Germany" is a proxy for the three main German-speaking countries) that:
- The IASB offers principles and guidance, but Germany wants rules
- The IASB requires the exercise of management judgement and common sense, but Germany wants legal certainty.

This is all part of the "culture clash" that has arisen from what some German accounting academics still call the "imposition" of the alien "Anglo-Saxon" IASs/IFRSs on the pure, German school of accounting. Hah!

Based on the references to "verdeckte Wahlrechte", though, it would appear that "offene Wahlrechte" go beyond just measurement, so here's an alternative answer:

"explicit options"

as opposed to the "verdeckte Wahlrechte", which would be the "implicit options".

Of course, this too assumes that there such things as "Wahlrechte" and "options" in IFRSs/IASs, which there aren't. There are only "benchmark methods", "allowed alternative treatments" and "elections".

I bet markj wishes he'd never asked this one...

RobinB
Germany
Local time: 18:39
Specializes in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 909
Grading comment
Thanks to you both for your detailed answers.

Peer comments on this answer (and responses from the answerer)
agree  Kieran McCann: this seems to be the counterpart of yet another accounting concept developed by academics, 'verdeckte Wahlrechte'. But these are not genuine options, simply areas where judgment has to be exercised: http://www.hausarbeiten.de/faecher/vorschau/37804.html
19 hrs
  -> Thanks for that tip about verdeckte Wahlrechte, which has opened up some new insights.
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