Separation - integration - and now...?: A historical perspective on the relationship between German management accounting and financial accounting

German accounting has traditionally followed a dual ledger approach with strictly separated internal cost accounting, as the basis for management information, and external financial accounting focusing on creditor protection and based on the commercial law. However, the increased adoption of integra...

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Bibliographic Details
Published in:Accounting history 2017-02, Vol.22 (1), p.67-91
Main Authors: Brandau, Michael, Endenich, Christoph, Luther, Robert, Trapp, Rouven
Format: Article
Language:English
Subjects:
19th century
20th century
Accounting
Accounting firms
Accounting systems
Cost accounting
Dialectics
Economic aspects
Globalization
History
International economic integration
International financial reporting standards
Management accounting
Managerial accounting
Social aspects
Studies
User needs
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Summary:German accounting has traditionally followed a dual ledger approach with strictly separated internal cost accounting, as the basis for management information, and external financial accounting focusing on creditor protection and based on the commercial law. However, the increased adoption of integrated accounting systems implies a significant change in the relationship between financial and management accounting systems. We use Hegelian dialectic to trace the historical development of German accounting from separated systems and antithetical propositions of full integration, to the emergence of partial integration as the synthesis of this transformation process. The foundation of our paper is a comprehensive analysis of the literature on the relationship between financial and management accounting in Germany. On this basis, we elaborate how financial accounting in Germany has been shaped by its economic context and legislation, and how financial accounting - accompanied by institutional pressures - in turn influenced management accounting. We argue that the changing relationship between management and financial accounting in the German context illustrates how current accounting practice is shaped not only by its environment, but also by its historical path. Based on this reasoning, we discuss several avenues for future research.
ISSN:1032-3732
1749-3374
DOI:10.1177/1032373216658035