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Management accounting standards-Initiative.

Author: Juergen H. Daum
Subject: Draft for a proposal of cooperation between European controlling / management accounting associations
in order to establish “International Controlling / Management Accounting Standards”
Approved by the Managing Committee of the IGC: January 2006
Why Do We Need International Management Accounting
In most European countries, International Financial Accounting Standards (IFRS) have created a
new era of accounting and financial reporting. Many companies that are applying IFRS for the
first time experience a sharp move away from their past accounting traditions - such as from the
traditional continental European principle of protecting creditors or from the caution principle
(value assets at the lowest possible value, value liabilities at the highest possible value) to full
shareholder value orientation and to the principle of “fair value” in accounting.
Fair value accounting, in particular, is confronting accountants and auditors with a major
challenge: they are no longer able to value assets and to test for possible asset impairment (for
example, impairment of the book value of certain assets such as intangible assets and goodwill
with their fair value) without the support of (business) controllers and management accountants,
who provide reliable and “testable” planning data. Furthermore, management needs to put a new
focus on their internal controlling and management accounting systems to better support the
external IFRS view and to steer the business proactively.
We, therefore, the board members of the International Controller Verein (ICV) and the
Managing Committee of the IGC, believe that the time has come for International Controlling
Standards / International Management Accounting Standards.
Mission of the Proposed Initiative
Europe is rich in well-tested, highly advanced management accounting and controlling concepts.
However, each management accounting tradition has thus far been developed and applied more
or less in a specific national context. A huge potential to shape the management accounting and
controlling practice globally remains unused and unexploited. We therefore propose a
cooperation initiative that addresses all European controlling and management accounting
associations, as far as possible with the support of the EU. Its mission:
- to bring the major players in the controlling / management accounting scene in Europe
together for such a pan-European initiative
- to establish one European standard for management accounting and controlling by
combing the strengths of the different approaches
- to take the lead in defining International Management Accounting Standards
- to create enough momentum to attract non-European parties to join the initiative in a
second step
Possible Next Steps
- First meeting of representatives of European controlling / management accounting
associations in first half of 2006. Intended result: agreement on joint “letter of intent”
and roadmap.
- Create a working committee of representatives of the different controlling / management
accounting associations that should work out a first version of “International
Management Accounting Standards” by mid-2007.

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