What is an off-balance sheet stock

Off-balance sheet transactions. What are they and how is their information in the appendix to be assessed according to §§ 285 No. 3, 314 Paragraph 1 No. 2 HGB?

Table of Contents

Presentation directory

List of abbreviations

1 Introduction

2 Off-balance sheet transactions and their disclosures in accordance with the German Commercial Code (HGB)
2.1 Off-balance sheet transactions
2.2. Disclosure of off-balance sheet transactions in the individual and consolidated financial statements
2.2.1 Functions of the Appendix
2.2.2 Content of the appendix
2.2.3 Purpose of §§ 285 No. 3, 314 Paragraph 1 No. 2 HGB
2.2.4 Overlap with Sections 285 No. 3a, 314 Paragraph 1 No. 2a HGB

3 Assessment of the disclosures in the notes according to the German Commercial Code using selected examples
3.1 ThyssenKrupp Steel Europe AG
3.2 Volkswagen AG
3.3 Phadia GmbH
3.4 MLP Finanzdienstleistungen AG
3.5 Deutsche Telekom AG
3.6 Other findings

4 conclusion

attachment

bibliography

List of legal sources

Presentation directory

Diagram 1: The term “business”.

Illustration 2: Characteristics of the size classes of the KapGes according to § 267 HGB.

Illustration 3: Off-balance sheet transactions of MLP Finanzdienstleistungen AG as of December 31, 2013.

In the appendix:

Illustration A: Excerpts from the annual financial statements of ThyssenKrupp Steel Europe AG, Duisburg, fiscal year October 1, 2013 - September 30, 2014.

Illustration B: Excerpts from the consolidated financial statements of Volkswagen AG, Wolfsburg, fiscal year January 1, 2014 - December 31, 2014.

Illustration C: Excerpts from the annual financial statements of Phadia GmbH, Freiburg im Breisgau, fiscal year 01.01.2013 - 31.12.2013.

Illustration D: Excerpts from the annual financial statements of Phadia GmbH, Freiburg im Breisgau, fiscal year 01.01.2012 - 31.12.2012.

Illustration E: Excerpts from the annual financial statements of MLP Finanzdienstleistungen AG, Wiesloch, fiscal year 01.01.2013 - 31.12.2013.

Illustration F: Extracts from the annual financial statements of Deutsche Telekom AG, Bonn, fiscal year January 1, 2014 - December 31, 2014.

Presentation G: Excerpts from the annual financial statements of Henkel AG & Co. KGaA, Düsseldorf, fiscal year January 1, 2014 - December 31, 2014.

Illustration H: Excerpts from the annual financial statements of Brenntag AG, Mülheim an der Ruhr, fiscal year January 1, 2014 - December 31, 2014.

Illustration I: Excerpts from the annual financial statements of Steilmann Holding AG, Bergkamen, business year 01/01/2013 - 31/12/2013.

List of abbreviations

Figure not included in this excerpt

1 Introduction

At one point or another, some companies may find it necessary to close deals that do not fit on the balance sheet. This is z. This is often the case, for example, with leasing, factoring or consignment warehouse agreements. If there were no legal regulations on this subject, the users of the balance sheet would never have known that such transactions were carried out in the company concerned. But there are the provisions of §§ 285 No. 3 and 314 Paragraph 1 No. 2 HGB, which regulate this matter for the annual and consolidated financial statements. Accordingly, certain information on these so-called off-balance sheet transactions must be made in the notes to the respective financial statements, whereby the amount of information required varies depending on the size of the corporation.

The aim of this thesis is to show what off-balance sheet transactions are and which regulations on the disclosure of these transactions are in the HGB. It is also important to use a few examples from practice to assess how this problem is addressed in the annexes to the annual and consolidated financial statements and how relevant the topic is at all.

For this purpose, a detailed explanation of the term "off-balance-sheet business" is provided in section two, in which the terms "business" and "off-balance sheet" are discussed in detail. Furthermore, the regulations of §§ 285 Paragraph 2, 314 Paragraph 1 No. 2 HGB, which form the core of this work, are explained. In addition, in this section the (consolidated) notes are classified as part of the annual and consolidated financial statements, whereby in particular its functions, its content, the purpose of the above. Regulations as well as possible overlaps with other regulations of the HGB are presented. Section three is devoted to assessing the disclosures in the notes for off-balance sheet transactions using selected examples from practice by analyzing the notes from three large industrial companies, a credit institute and a large telecommunications company with regard to the topic under consideration here. Finally, there is a summary of the most important analytical findings and a brief outlook in the last section of this work.

2 Off-balance sheet transactions and their disclosures in accordance with the German Commercial Code (HGB)

In the following section, the content of §§ 285 No. 3, 314 Paragraph 1 No. 2 HGB is examined and in this context the off-balance sheet transactions are discussed in detail. In addition, the (consolidated) notes are classified as one of the three components of the annual financial statements or one of the five components of the consolidated financial statements. In particular, the functions of the appendix are shown. There is also a brief overview of the type of information in the appendix. Then the most important motives of the legislature for the above mentioned. Paragraphs shown. Finally, reference is also made to the overlap with the similar provisions, in particular with §§ 285 No. 3, 314 Paragraph 1 No. 2 HGB on other financial obligations and explains how such overlaps are to be dealt with according to the requirements of the legislature .

2.1 Off-balance sheet transactions

Section 285 No. 3 of the German Commercial Code (HGB) stipulates that the type, purpose, risks and benefits as well as the financial effects of transactions not included in the balance sheet must be stated in the notes if this is necessary for assessing the company's financial position and the risks and benefits from these deals are material. It is primarily a matter of ensuring that the company's liquidity is secured and that it can meet its financial obligations in the short, medium and long term. Analogous to this, the same situation is regulated with regard to the notes to the consolidated financial statements in Section 314 (1) No. 2 of the German Commercial Code. This concerns the transactions of the parent company that are not included in the consolidated balance sheet and those of the subsidiaries included in the consolidated financial statements. The off-balance sheet deals are given special mention as they would not show up anywhere else. Thus the economic situation of the company is made more transparent, the overall picture is more complete and understandable for all target groups and readers of the balance sheet.[1]

As Figure 1 shows, the term “business” has several meanings. In this case we are interested in the meaning of this term as a legal transaction. This means that the provision of §§ 285 No. 3 and 314 Paragraph 1 No. 2 HGB means with “transactions not included in the balance sheet” primarily legal agreements based on declarations of intent and aimed at legal success.[2] These transactions will be referred to as "off-balance sheet transactions" in the further course of this work. This includes all transactions that are either not shown permanently in the trade balance sheet from the outset or that cause assets or debts to be permanently removed from the trade balance sheet.[3]

Figure not included in this excerpt

Diagram 1: The term “business”.

Source: http://wirtschaftslexikon.gabler.de/Archiv/9411/geschaeft-v9.html

(Status: 11/17/2015).

A common feature of off-balance sheet transactions is the lack of beneficial ownership. This happens, for example, if the company preparing the balance sheet is legally in possession of an item and beneficial ownership is to be ascribed to another company. Beneficial ownership belongs to the person who actually has the item. In the case of that person, the item is also to be accounted for.[4] A typical example of this in most cases is finance leasing. The lessor is the legal owner of something. The lessee, on the other hand, is the beneficial owner during a basic rental period that cannot be terminated.[5] According to Section 246 (1) of the German Commercial Code (HGB), in such a case the item is not to be accounted for with the legal owner (= lessor), but with the beneficial owner (= lessee).

Other examples of off-balance-sheet transactions are, in addition to leasing contracts, among others. Factoring, repurchase agreements, consignment warehouse agreements, securitization of accounts receivable, contracts with unconditional payment obligations (so-called "take or pay" contracts) or similar.[6] Factoring is the sale of receivables (one-off or ongoing), among other things. to get cash more quickly. Like leasing, factoring is part of what are known as credit substitutes. This means that you use this financing option instead of a normal loan to bridge short-term liquidity bottlenecks.[7] In the case of take or pay contracts, a contract is concluded between a producer and a buyer, whereby the latter undertakes to pay a certain amount of money, regardless of whether the products are manufactured or purchased.[8] A receivables securitization provides the company with liquid funds, similar to factoring, as it involves putting together a receivables portfolio of a (mostly global) company, converting it into tradable securities and issuing it on the capital market.[9]

Repurchase agreements involve the transfer of assets (often securities), with the repo lender having the obligation or the right to choose to buy them back after a certain period of time. If there is an obligation to return, the seller must continue to account for the asset.[10] The consignment warehouse agreements are agreements in which a supplier operates a warehouse for the company in question at his own expense. The goods remain the property of the supplier until they are removed by the customer.[11] All these examples have in common that certain asset transfers take place, whereby either the assets are completely transferred to third parties, as in factoring, or the transfer no longer coincides the economic and legal ownership, as is the case with repurchase agreements. Thus, the aspect of ownership can be established as an important characteristic of off-balance sheet transactions.

2.2. Disclosure of off-balance sheet transactions in the individual and consolidated financial statements

The regulations of Section 285 No. 3 HGB relate to the other mandatory information on off-balance sheet transactions in a company's (individual) annual financial statements. According to Section 264 (1) of the German Commercial Code (HGB), the annual financial statements consist of three equivalent components, namely, a balance sheet, an income statement and an appendix. Whereby for all corporations and partnerships i. S. d. Section 264a of the German Commercial Code[12] applies. However, those companies that are not required to attach notes to the annual financial statements can do so voluntarily.[13]

Similarly, Section 314 (1) No. 2 HGB deals with the other mandatory information on off-balance-sheet transactions in consolidated financial statements, consisting of a consolidated balance sheet, a consolidated income statement, a consolidated annex, a cash flow statement and a statement of changes in equity[14], whereby individual components of the consolidated financial statements are not to be discussed at this point. The five components form a unit, as do the three components in the individual financial statements - balance sheet, income statement and notes.[15] The appendix thus plays an important role as a component of the annual or consolidated financial statements, because the respective financial statements are not complete without the appendix.[16]

A special feature of the consolidated financial statements is that the group is to be seen as an economic and legal unit and thus the asset, financial and earnings position is to be presented accordingly. This means that the economic situation of the parent company and all associated subsidiaries must be presented as if they were a single company. Based on this uniform theory, the individual group companies are regarded as equal shareholders in the group.[17] In principle, according to Section 298 (1) of the German Commercial Code (HGB), the regulations for the individual financial statements are to be applied to the consolidated financial statements, unless there are separate deviating regulations for the consolidated financial statements. These include B. the regulations of § 266 HGB for the structure of the balance sheet or of § 275 HGB for the structure of the income statement.[18]

For both the individual and the consolidated financial statements, compliance with the principles of proper accounting (GoB) generally applies to the entire financial statements and in particular to the preparation of the notes, which is reflected in Section 243 (1) HGB for the annual financial statements and analogously in Section 297 (2) sentence 2 of the German Commercial Code (HGB) for the consolidated financial statements. This includes in particular the principles of clarity and clarity, the principles of truth and completeness and the principles of materiality. The requirement for clarity and clarity can be found in Section 243 (2) and Section 297 (2) sentence 1 of the German Commercial Code. In addition, the information must be true and complete and only the essential information should be included so that the appendix is ​​not flooded with unnecessary information, which would reduce the clarity and clarity as a result.[19] Furthermore, the principles of § 252 HGB are also not to be neglected, e.g. B. the principle of prudence (para. 1 no. 4) or the retention of the assessment methods (para. 1 no. 6).

Since there are no legal requirements for the structure and form of the appendix, there is a certain freedom of representation in this regard, although certain common types of representation can be found in practice. In this context, it is recommended to keep the type of presentation selected from year to year for the appendix as well, which is prescribed for the balance sheet and income statement in Section 265 (1) of the German Commercial Code (HGB). This promotes clarity and clarity and facilitates comparisons between several financial years.[20]

2.2.1 Functions of the Appendix

Among the various functions of the appendix, the information function is one of the most important. The point here is that the internal and external addressees of the annual financial statements get a correct picture of the assets, financial and earnings position of the company in question.[21] The internal addressees can e.g. B. the partners or shareholders or own employees. External addressees include: the potential investors, the tax office, the general public, etc.

The explanatory or explanatory function is one of the additional functions of the appendix. This is shown in the fact that additional information on the balance sheet and income statement must be made in the appendix. This in turn leads to a better understanding of the contents of the balance sheet or P&L, there is no space for detailed explanations or the like. For example, information on accounting and valuation methods that were used in the balance sheet and P&L can be found in the appendix. This results in a (somewhat subordinate) qualification function of the appendix, because the appendix enables the reader to better understand the background to the balance sheet or income statement, so that certain conclusions can be put into perspective on the basis of the explanations in the appendix.[22]

A correction function can result from the relativization function if the case occurs that, despite compliance with all regulations in the preparation of the balance sheet and the income statement, the picture of the asset, financial and earnings position of the company in question is not entirely correct. In very extreme cases it can lead to a bad economic situation being presented as "good" or a good situation as "bad", because z. B. extreme alternatives were chosen for the electoral rights. In order to correct this afterwards, additional information can be given in the appendix in these exceptional cases in order to move the displayed image back in the right direction. The criterion for the need for additional information for correction is the avoidance of misinterpretations with regard to the asset, financial and earnings position of the company, which may arise on the part of the readers of the balance sheet. For example, the correction may be necessary if a company reports fictitious profits at foreign permanent establishments or provides information on significant results distortions due to partial liquidations.[23]

The relief and supplementary functions can be cited as more subordinate functions. The relief function makes it possible, due to the equivalence of the components of the annual financial statements, to move information that does not necessarily have to be in the balance sheet or income statement to the notes in order to gain more clarity and clarity in the first two. An example of this is information on unscheduled depreciation in fixed assets. The supplementary function offers the opportunity to provide additional information in the notes that has nothing to do with the accounting, but which overall contribute to a better information content in the annual financial statements, e.g. B.the information on shareholdings.[24]

The functions of the notes to the consolidated financial statements are largely congruent with the functions of the notes to the individual financial statements. However, the information function plays an even more important role in the consolidated financial statements than in the annual financial statements, as there are often listed group companies here and with these it is particularly important to inform the shareholders about the economic situation of the group and to make the group structures more transparent. In addition, the consolidated financial statements are not used as a basis for calculating the dividend or for tax purposes. It is therefore important to make this more understandable for all parties involved and to provide sufficient information on the other components of the annual financial statements in the notes to the consolidated financial statements. The other functions such as explanatory, supplementary, relief and correction functions play a role in the consolidated financial statements in the same way as in the individual financial statements, but here as sub-functions they are viewed as somewhat less important. In contrast to the individual financial statements, group-specific information can be made in the notes to the consolidated financial statements, e. B. certain information on the scope of consolidation or the consolidation methods. This is how the explanatory function comes into play, as the information from the consolidated balance sheet and the consolidated income statement are explained in more detail and the entire procedure for the consolidated financial statements is clearer.[25]

2.2.2 Content of the appendix

In general, the appendix is ​​in most cases divided into information on the accounting and valuation methods used in the annual financial statements or consolidated financial statements, explanations on the balance sheet and income statement and other information. The notes to the consolidated financial statements also contain general information on the consolidated financial statements, the scope of consolidation and the consolidation methods.[26]

With regard to the content of the appendix, the information contained therein can be divided into mandatory, optional and voluntary information. As the name suggests, the mandatory information is information that must be provided in the appendix. So there is no right to vote or the like in this regard, but it is required by law that the information must take place there. The mandatory information is regulated in particular in § 284 HGB as explanations of the balance sheet and income statement and in § 285 HGB as other mandatory information for the individual financial statements. Analogous to this, the provisions on mandatory disclosures for the notes to the consolidated financial statements can be found in Sections 313 and 314 of the German Commercial Code in particular. Sections 285 and 314 of the German Commercial Code (HGB) contain the regulations on extraordinary transactions that form the core of this work. Other examples of mandatory information are information on accounting and valuation methods in accordance with Section 284 (2) No. 1 and Section 313 (1) No. 1 HGB, detailed information on depreciation in accordance with Section 284 (3) HGB, information on liabilities with a remaining term of more than five years in accordance with § 285 No. 1 a) or § 314 Paragraph 1 No. 1 HGB and many more.[27]

With the optional information, there is a right to choose between the balance sheet, the income statement and the appendix as the place of information for certain facts. These include B. Information on the activated discount in accordance with Section 268 (6) HGB, information on unscheduled depreciation on the lower fair value in the AV in accordance with Section 277 (3) sentence 1 HGB and a few more. The last category of information - the voluntary information - contains additional explanations to the other information in the notes or to the other components of the financial statements. The prerequisite is that this information is factually related to the annual or consolidated financial statements and does not violate the principles that must be observed when preparing the annual financial statements. In particular, the voluntary information must not lead to the clarity and clarity in the appendix no longer being guaranteed.[28]

For the disclosure of off-balance sheet transactions in the notes, there are some size-dependent reliefs for medium-sized and small corporations. On the one hand, the small corporations i. S. d. Section 267 (1) of the German Commercial Code (HGB) do not provide any information on off-balance-sheet transactions. This can be found in Section 288 (1) No. 2 HGB. The limits for determining the size class can be found in illustration 2, whereby in accordance with Section 267 of the German Commercial Code (HGB), two of the three limits must be exceeded so that the corporation is no longer eligible for the respective size class. In the next higher class, on the other hand, only one characteristic may be exceeded so that the company can be assigned to this size class. For the large corporations, the limits from the second line of illustration 2 apply.

Figure not included in this excerpt

Illustration 2: Characteristics of the size classes of the KapGes according to § 267 HGB.

Source: Own illustration based on Section 267 of the German Commercial Code.

For medium-sized corporations, the regulation of Section 285 No. 3 HGB is to be applied in its moderated form. Although the nature and purpose of the off-balance sheet transactions must be stated, the risks and benefits of these transactions do not need to be stated. However, the societies can do this voluntarily. For the large corporations there are no reliefs in this regard, but they have to provide the complete information on the off-balance sheet transactions, if they are available at all.[29]

2.2.3 Purpose of §§ 285 No. 3, 314 Paragraph 1 No. 2 HGB

What characterizes off-balance sheet transactions and how these are to be reported in the (consolidated) notes has already been described in detail in the previous sections. The purpose of the above Regulations have also already been indicated, but this section deals with this topic in more detail. To do this, the first question to be answered is why off-balance sheet transactions are concluded. One possible reason for this is the relatively quick procurement of liquid funds, which is the case with factoring or with securitization of accounts receivable. It is also possible that the company does not have sufficient financial resources to make a capital-intensive investment in e.g. B. to operate a vehicle fleet or systems. In this case, leasing is an option so that the company still receives the items it needs for its business activities and this activity is not endangered. Another reason for entering into off-balance sheet transactions, e.g. B. plays a role in factoring, is the balance sheet shortening, which in turn can lead to an improvement in the balance sheet structure or to improved balance sheet ratios. In summary, it can be said that, depending on the type of business, other reasons are also conceivable. Depending on the company, these would have to be considered in the overall context and may vary from company to company depending on the situation.[30] In general, they can be divided into economic, legal, tax and accounting policy reasons. For example, when it comes to raising cash, there is an economic purpose. If the company is circumventing a legal requirement by entering into an off-balance sheet transaction, it is a legal purpose. In the case of tax advantages, it is the case of tax reasons and in the case of an improvement in the balance sheet ratios or a balance sheet shortening or the like, it is about the accounting policy reasons of the conclusion.[31]

The next step is to examine the risks and benefits of off-balance sheet transactions. In general, a risk or an advantage can arise from the conclusion of an off-balance sheet transaction if it has negative or positive effects on the company's asset, financial and earnings position.[32] In detail, the risks and benefits are related to the respective type of off-balance sheet business. If you z. B. specifically looks at leasing as an off-balance sheet transaction, some advantages are conceivable. For example, the liquidity burden for the lessee is lower compared to purchasing the property, and the leasing installments can be deducted in full for tax purposes as operating expenses. On the other hand, a possible risk to the company is i. d. Usually a higher total cost burden, since leasing is considered a relatively expensive type of financing.[33] For each type of off-balance sheet business, there can be different risks and benefits for the company.

Finally, the key question in this section is: why do these off-balance sheet transactions exist? The risks and benefits relate to the company's liquidity, its very important ability to pay its short, medium and long-term liabilities. This information is therefore always necessary for the annual financial statements or consolidated financial statements if the off-balance sheet transactions with their risks and benefits have a significant impact on the company's current and future financial position. It is also important that the addressees of the annual financial statements can correctly assess the company's financial position, i.e. that the annual financial statements or the consolidated financial statements and their components provide a correct picture of the company's economic situation. Disclosing off-balance sheet transactions in the notes reveals the potential impact of these transactions on the company's financial position. The overall transparency is increased, which z. B. i.a. is advantageous for (small) shareholders of large corporations, so that they get a better overview of the economic situation of the company in which they are involved. The overall picture of the asset, financial and earnings position of the company concerned becomes more complete and the further development of the company can be better and more accurately assessed by all balance sheet addressees and readers based on all the necessary information.[34]

2.2.4 Overlap with Sections 285 No. 3a, 314 Paragraph 1 No. 2a HGB

In addition to the provisions of Sections 285 No. 3, 314 Paragraph 1 No. 2 HGB, there is a requirement to disclose other financial obligations that are not included in the balance sheet, in accordance with Sections 285 No. 3a, 314 Paragraph 1 No. 2a HGB. This regulation is very closely related to the regulations on off-balance sheet transactions. There it is also decisive for the disclosure of such obligations that they are important for the assessment of the company's financial position. Other off-balance sheet obligations include B. Obligations from pending legal transactions, obligations arising from state requirements, etc. It may be the case that the respective situation could fall under both provisions, so the delimitation would be difficult. For such cases, the legislature stipulated that No. 3 (for the individual financial statements) and No. 2 (for the consolidated financial statements) each take precedence over No. 3a and 2a.

This problem can predominantly occur if other financial obligations according to No. 3a or 2a cannot be clearly separated from the risks of off-balance sheet transactions according to No. 3 or 2. In most cases, financial obligations have a negative impact on the company's liquidity. This means that they can also be counted among the risks for off-balance sheet transactions. A double entry should not take place under any circumstances, but in case of doubt the information falls under off-balance sheet transactions. The assessment of this may be an individual decision.[35]

There may be further overlaps with other regulations, such as B. with other mandatory information on liability relationships according to § 285 No. 27 i. V. m. §§ 251, 268 Abs. 7 HGB. According to Section 251 of the German Commercial Code (HGB), these include, among other things, liabilities from sureties, warranty contracts, bills of exchange and check guarantees, etc. In this case, No. 27 takes precedence over No. 3 rarely occurs.[36]

3 Assessment of the disclosures in the notes according to the German Commercial Code using selected examples

The aim of this section is to use the annual and consolidated financial statements of selected companies to examine the extent to which information on off-balance-sheet transactions can be found in the notes or to the consolidated financial statements. If this information is available, it is necessary to analyze whether it is complete for the respective size of the corporation. Since all of the examples considered in this section are large corporations, no size-dependent relief with regard to the provisions of §§ 285 No. 3, 314 Paragraph 1 No. 2 HGB apply to all of them. The information must therefore be checked for completeness with regard to the type, purpose, advantages and risks of the off-balance-sheet transactions in the financial year. A total of five examples are analyzed in detail in order to be able to assess the disclosures in the notes on off-balance sheet transactions. These examples deal with three industrial companies: ThyssenKrupp Steel Europe AG, Volkswagen AG and Phadia GmbH, all of which are large corporations. In addition, a credit institute, MLP Finanzdienstleistungen and a telecommunications company, Deutsche Telekom AG, are responsible for the above. Subject examined. The order of the examples is arbitrary. Finally, an overview of the other findings obtained is given, with arguments based on a few selected, rather smaller examples.[37]

3.1 ThyssenKrupp Steel Europe AG

The first is the largest German steel producer from the Ruhr area, ThyssenKrupp Steel Europe AG, based in Duisburg. This is a subsidiary of ThyssenKrupp AG based in Duisburg and Essen. ThyssenKrupp AG is the parent company of the ThyssenKrupp Group. For the analysis of off-balance-sheet transactions, the annual financial statements of the above-mentioned Subsidiary used for the financial year October 1, 2013 - September 30, 2014. The financial year for both companies runs from October one year to September next year.

On average, ThyssenKrupp Steel Europe AG had 19,504 employees in the fiscal year under review. The balance sheet total was € 4,305,500,000 and sales for the 2013/2014 financial year amounted to € 7,732,000,000.[38] The company thus fulfills at least two (all three) characteristics for large corporations from illustration 2 and it is a large corporation in accordance with Section 267 (3) of the German Commercial Code (HGB). With regard to the disclosures in the notes on off-balance sheet transactions, this means that there are no size-dependent reliefs for this company, but information about the type and purpose as well as the risks and benefits of the off-balance sheet transactions must be made. This means that if these transactions are available, the information about them should be available in a detailed form in the appendix. Since these are annual financial statements, the provisions of Section 285 No. 3 HGB are relevant.

In the notes of ThyssenKrupp Steel Europe AG under the item "Transactions not included in the balance sheet" you will find information on three types of off-balance-sheet transactions with the respective detailed explanations.[39] On the one hand, there has been a factoring contract with a minimum term of five years since December 2011. This means that as of the balance sheet date in September 2014, the company was still within this period. In addition, the advantages of selling receivables are indicated: the improvement of the liquidity situation and the financial structure of the company. So here is the information about the type of business (factoring or sale of receivables) and the advantages of it. There is no information on the purpose and the risks of factoring, whereby the purpose is very closely related to the advantages and can be derived from them. The minimum term can be a possible risk, because during this the company cannot step out of the contract. However, there is a certain scope for interpretation here, as it is not explicitly presented as a risk.

Secondly, the notes to the annual financial statements of the company under review contain information on a coke purchase contract, more precisely on a purchase contract for coke, by-products and by-products with a term until 2019. The long-term nature of this contract is emphasized, so that there is also a possible risk for the Society suggests, e.g. For example, if it suddenly goes into financial difficulties, it still has to purchase certain amounts of coke, by-products and by-products by 2019. On the other hand, the purpose is stated, namely that this contract is intended to ensure the long-term demand for these products for coke production. This long-term purchase contract can be counted among the take or pay contracts.[40] Information on the type and purpose of the business can be found here. The risks and advantages can only be derived indirectly from this, so the risk from the type and the advantage from the purpose.

Finally, there is the information on the outsourcing of operational functions, namely sub-tasks in the areas of accounting / finance, payroll accounting and IT.Outsourcing has not yet been explicitly discussed in Section 2.1, but it can also be counted as off-balance sheet transactions. It is also common practice in many companies around the world today. In the case of ThyssenKrupp Steel Europe AG, the contracts for the outsourced functions have an indefinite term. The purpose of these contracts is to standardize the processes in the group. The efficiency gains are named as an advantage of this. At this point it is similar to factoring and the long-term purchase contract that the information is not completely complete. There is information on the nature, purpose and advantages of this off-balance sheet transaction. With the exception of the indefinite term, which in turn leaves room for interpretation, no information on risks has been given.

Overall, the information in the notes on the off-balance-sheet transactions of this large corporation is relatively detailed and clear. The GoB are also complied with. The types of business are mentioned, and their purposes and benefits are also discussed. In some cases, the purpose or the advantages can only be derived indirectly from other information. The indication of the risks is rather inadequate, some of which can only be inferred indirectly or not at all. This creates the impression that the situation should be presented too positively, because only positive aspects are addressed and the negative is treated only carefully and indirectly (e.g. in the form of long-term contracts), whereby there is again room for interpretation. It may also be the case that the addressees of the annual financial statements are expected to make the risks and disadvantages of the off-balance sheet transactions clear to everyone so that they do not need to be named.[41]

3.2 Volkswagen AG

This section is dedicated to another example, namely the largest German company (as of 2014), the Volkswagen Group based in Wolfsburg.[42] This is one of the world's leading multi-brand groups in the automotive industry, with the group divisions consisting of automobiles and financial services. Volkswagen AG is the parent company of the group. The latest emissions scandals relating to the Volkswagen Group should be disregarded here, and the possible effects of this can only be seen in the financial statements for the current year 2015 at the earliest. The consolidated financial statements of Volkswagen AG for the fiscal year January 1, 2014 to December 31, 2014 are used for this work and analyzed with regard to the disclosures in the notes on off-balance sheet transactions. The fiscal year at Volkswagen AG is the respective calendar year. Since these are consolidated financial statements, the provisions regarding the disclosure of off-balance sheet transactions in accordance with Section 314 (1) No. 2 of the German Commercial Code (HGB) apply.

The average number of employees at Volkswagen AG over the year was 583,423. The balance sheet total was € 351,209,000,000 and sales for the 2014 financial year were € 202,458,000,000.[43] Since this is the largest German company, it is clear, even without checking the characteristics for the size of the corporations, that it is a large corporation in accordance with Section 267 (3) of the German Commercial Code (HGB). The characteristics also clearly exceed the corresponding figures of ThyssenKrupp Steel Europe AG, and this was already well above the limits for medium-sized companies, so Volkswagen AG is considered a large corporation. It follows from this that no size-dependent simplifications apply here either, but complete information on the type and purpose as well as the risks and advantages of the off-balance-sheet transactions must be made.

The notes to the consolidated financial statements of Volkswagen AG contain information on two types of off-balance sheet transactions.[44] On the one hand, like ThyssenKrupp Steel Europe AG, it is about factoring. The height was specified for this. It was also stated that the credit risk remained with the Volkswagen Group. Further information on this was not available, so there is no information on the purpose and advantages.

[...]



[1] See Poelzig (2013a), Rn. 29, 39; For more on the aims and purposes of §§ 285 No. 3, 314 Paragraph 1 No. 2 HGB, see Section 2.2.3 of this work.

[2] See http://wirtschaftslexikon.gabler.de/Archiv/133/rechtsgeschaefte-v7.html (status: November 17, 2015); Poelzig (2013), marginal number 33.

[3] See Winnefeld (2015), Rn. 120; Poelzig (2013a), para. 34.

[4] See Poelzig (2013a), Rn. 35.

[5] See http://wirtschaftslexikon.gabler.de/Archiv/6859/leasing-v11.html (as of November 17, 2015).

[6] See Senger / Maier (2013), para. 18.

[7] See http://welt-der-bwl.de/Factoring (as of November 17, 2015).

[8] See http://wirtschaftslexikon.gabler.de/Archiv/326719/take-or-pay-vertrag-v3.html (as of: November 17, 2015).

[9] See Ortseifen (2005), http://www.handelsblatt.com/unternehmen/mittelstand/abs-haelt-einzug-in-die-mittelstandsfinanzierung-forderungsverbriefung-schetzt-liquiditaet/2488546.html (as of November 17, 2015).

[10] See http://www.wirtschaftslexikon24.com/d/pensionsgesch%C3%A4ft/pensionsgesch% C3% A4ft.htm (as of November 17, 2015).

[11] See http://www.wirtschaftslexikon24.com/d/konsignationslager/konsignationslager.htm (as of November 17, 2015).

[12] "... general partnerships and limited partnerships in which at least one general partner is not 1. a natural person or 2. a general partnership, limited partnership or other partnership with a natural person as general partner or the association of companies continues in this way . "

[13] See Weber (2015), Rn. 2.

[14] See Section 297 (1) of the German Commercial Code.

[15] See Böcking / Gros / Schurbohm / Ebneth (2014), Rn. 5, Weber (2015) Rn. 1.

[16] For the functions of the appendix, see Section 2.2.1 of this work.

[17] See § 297 Paragraph 3 Sentence 1 HGB; see also Poelzig (2013b), marginal 16, Coenenberg / Haller / Schultze (2009), p. 596.

[18] See Liebscher (2015), No. 1325.

[19] See Poelzig (2013b), paras. 13-14, 24.

[20] Ibid, paragraphs 25-28.

[21] See Kessler (2013), para. 9.

[22] See Kessler (2013), marginal 10, Deussen (2015), marginal 17-18.

[23] See Kessler (2013), Rn. 11; Coenenberg / Haller / Schultze (2009), pp. 857 - 858, 863.

[24] See Kessler (2013), marginal 12, Deussen (2015), marginal 19-20; Coenenberg / Haller / Schultze (2009), p. 864.

[25] See Poelzig (2013b), paras 17-18.

[26] See Coenenberg / Haller / Schultze (2009), p. 859.

[27] See Kessler (2013), paras 25-30; Weber (2015), para. 6; Poelzig (2013b), Rn. 20.

[28] See Kessler (2013), paras. 25, 34 - 35, 42 - 43; Weber (2015), paras. 6-7; Poelzig (2013b), Rn. 20.

[29] See Poelzig (2013a), Rn. 30.

[30] See Winnefeld (2015), para. 120.

[31] See Poelzig (2013a), para. 45.

[32] Ibid, para. 43.

[33] See http://www.foerderland.de/finanzen/leasing/vor-und-nachteile-des-leasings/ (as of November 17, 2015).

[34] See Grottel (2014), marginal numbers 21, 36 - 37; Poelzig (2013a), Rn. 29.

[35] See Poelzig (2013a), Rn. 47; Coenenberg / Haller / Schultze (2009), pp. 865 - 866.

[36] See Poelzig (2013a, No. 48.

[37] This section is based on information from the annual financial statements of ThyssenKrupp Steel Europe AG, Duisburg, FY 2013/2014 and the consolidated financial statements of ThyssenKrupp AG, Duisburg and Essen, FY 2013/2014.

[38] See illustration A in the appendix.

[39] Ibid.

[40] See Section 2.1 of this work.

[41] This section is based on information from the consolidated financial statements of Volkswagen AG, Wolfsburg, FY 2014.

[42] See http://www.finanzen.net/top_ranking/top_ranking_detail.asp?inRanking=790&inPos=20 (status: 02.12.2015).

[43] See illustration B in the appendix.

[44] Ibid.

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