This paper examines the influences on French financial accounting and reporting, especially by analyzing the annual report for the year ended 2009 of the French listed company named LVMH Group SA (LVMH).
The reader can find a brief introduction to the development and landscape of French accounting and its role in a comparative global financial reporting and accounting framework, where international standards (IAS/IFRS) put pressure in national and regional accounting systems. Furthermore, the classification and the influences on French accounting are briefly examined.
Moreover this paper includes a ratio analysis of the LVMH Group SA for the year ended 2009. Finally, a more in-depth analysis of how specific features, such as asset valuation, consolidation and non-financial disclosures, are treated is done.
Table of Contents
1. Introduction
2. Literature Review
2.1 Classification of French Accounting
2.2 Cultural, Historical and Legal influences on French Accounting
3. Application
3.1 Ratio analysis of the LVMH Group for year ended 2009
3.2 Treatment of specific financial accounting features
4. Conclusion
Objectives and Topics
This paper examines the various cultural, historical, and legal influences on French financial accounting and reporting, utilizing an analytical case study of the LVMH Group SA’s 2009 annual report to evaluate its practical application within the global accounting landscape.
- Historical evolution of French accounting requirements and legislation.
- Theoretical classification of French accounting systems within international frameworks.
- Practical ratio analysis of the LVMH Group regarding liquidity, activity, and profitability.
- Evaluation of accounting standards including IAS/IFRS compliance and asset valuation methods.
Excerpt from the Book
3.2 Treatment of specific financial accounting features
According to the LVMH annual report 2009 (page 50), the balance sheet, income statement and the notes of the LVMH SA parent company were prepared in accordance to the French legal requirements, particularly regulation 99-03 of the Comité de la Réglemation Compatable and principles generally accepted in France (page 185). The consolidated financial statements were established according to the international accounting standards and interpretations (IAS/IFRS) adopted by the European Union and applicable on 31st December 2009 (page 118). However, the parent company coordinates the operational activities of all subsidiaries and offers management support services; this is why the balance sheet does not include assets such as intangible assets etc.
As usual for French companies, the so-called Bilan Social of the Group is very detailed either. This part in the annual report shows detailed information about the sustainable development and social responsibility of the group in areas such as Human Resources, Corporate Sponsorship and Environment. Every part has been audited in particular by the auditors. According to the European Directive annual reports of listed companies should contain information about the director fees. However, the annual report of LVMH contains a very detailed and several pages long part about the directors fees, the bonus system and the share options they get. Furthermore, stock market participations of any director are listed in detail (page 65).
In terms of asset valuation the Group is using different methods. Inventories for instance are recorded at the lower of costs (manufacturing cost or purchase cost plus incidental cost), excluding interest costs, and net realizable value. The Inventories are valued using the weighted average cost or the FIFO method (page 122).
Summary of Chapters
1. Introduction: This chapter outlines the historical evolution of French accounting requirements, beginning with the 1673 royal decree and the Napoleonic Code de Commerce, and notes the subsequent shift toward international standardization.
2. Literature Review: This section provides a theoretical classification of French accounting, examining cultural and structural dimensions as defined by researchers like Nobes, Mueller, and Gray.
3. Application: This chapter performs a comprehensive financial ratio analysis of LVMH and investigates how the group handles specific accounting features such as consolidation and asset valuation.
4. Conclusion: The final chapter summarizes the findings, asserting that French accounting has moved toward international standardization, particularly for large listed corporations, due to the adoption of IAS/IFRS.
Keywords
French Accounting, Financial Reporting, LVMH Group, IAS/IFRS, Ratio Analysis, Liquidity, Profitability, Gearing, Cultural Influence, Accounting Standards, Asset Valuation, Consolidation, Statutory Control, Secrecy, Harmonization
Frequently Asked Questions
What is the core focus of this research paper?
The paper explores the diverse influences—cultural, historical, and legal—that have shaped the French financial accounting and reporting system, using the LVMH Group as a practical case study.
What are the primary thematic areas covered in the document?
The themes include the historical background of French accounting, theoretical classification models, financial ratio analysis (liquidity, activity, profitability), and specific technical treatments like consolidation and asset valuation.
What is the central research question or objective?
The objective is to understand how national and international influences have impacted French accounting practice and how these principles are applied in a contemporary corporate setting.
Which scientific methodology is employed in this study?
The study employs a descriptive analysis of existing accounting literature and a quantitative case study approach, utilizing the 2009 annual report of LVMH to demonstrate real-world application.
What content is discussed in the main body of the paper?
The main body consists of a literature review on accounting classifications and a detailed practical application section where financial ratios are calculated and specific accounting policies of LVMH are analyzed.
Which keywords best characterize this work?
Key terms include French Accounting, Financial Reporting, IAS/IFRS, Ratio Analysis, Asset Valuation, and Accounting Harmonization.
How does the French accounting system treat the valuation of vineyard land?
Unlike other properties that are recognized at acquisition cost, vineyard land at LVMH is recognized at market value based on independent appraisals or similar regional transactions.
What does the LVMH financial ratio analysis reveal about the company's liquidity?
The analysis shows that LVMH maintains strong liquidity, with both current and quick ratios performing above sector levels, indicating a solid ability to meet short-term obligations.
What is the significance of the "Bilan Social" mentioned in the report?
The "Bilan Social" is a detailed report typically found in French corporate annual reports that provides transparent information regarding sustainable development, social responsibility, and human resources.
How does the transition to IAS/IFRS affect French companies?
The adoption of IAS/IFRS for consolidated statements has significantly enhanced the international comparability of large French listed companies with other global corporations.
- Arbeit zitieren
- Panagiotis Papadopoulos (Autor:in), 2011, The Influence on Financial Accounting and Reporting in France, München, GRIN Verlag, https://www.hausarbeiten.de/document/182628
