Financial Accounting Theory Report: Daimler AG's Financial Statements

This report provides an analysis of Daimler AG's financial accounting practices. It begins with an introduction to Daimler, a German-based automobile manufacturing company, and its risk management policies. The report outlines the company's adherence to International Financial Reporting Standards (IFRS) and German accounting standards in preparing consolidated financial statements. It discusses accounting standards, financial statements, and measurement methods, including the use of historical cost basis and exceptions for certain financial assets. The report also explores internal controls, the roles of management and the Board of Directors, remuneration practices, and the compliance management system, including the use of a whistle blower policy. References to relevant academic sources are also provided.

Running head: FINANCIAL ACCOUNTING THEORY
Financial Accounting Theory
Name of the Student
Name of the University
Author Note

1
FINANCIAL ACCOUNTING THEORY
An investigating team has been appointed by Mercedes Benz, which is a German based
company. Every year they present the compliance and non compliance of the company in their
annual report. Following are the points to be illustrated in the investigation process:
Introduction
Daimler is an automobile manufacturing company which is based in the Country,
Germany. It has its own risk and management policies which helps the company in reporting and
control process. The Supervisory Board in the company helps in getting the accounting approval.
The audit committee of the company meets once in a year to discuss the changes in the
accounting rules and policies, thereby helping in risk management of the organization.
International Accounting Policies
The consolidated financial statement of Mercedes Benz is prepared by following the
International Financial Reporting Standards. The supplementary standards of the Company are
followed as per the German Code.
The accounts of Daimler AG are prepared according to the Code of International
Standards. They prepare their interim report according to the provisions of the German Act. The
external auditors review their financial report. They follow the accounting year from 1st January
till 31st December. The Board has prepared the combined report of compliance according to the
law pursuant to Section 315a (1) HGB.
The company follows the accrual basis of accounting and it maintains the day to day
income and expenditure that occurs in the sales position, this makes it easier for the company to
have financial stability. The IASB is an International principle used for the preparation of

2
FINANCIAL ACCOUNTING THEORY
financial statements. This standards used is helpful to the Company which makes the information
accessible to all the investors and the public.
Accounting standards and financial statements
The accounting standards and financial statement followed by Mercedes Benz is the
GAAP .The accounts and financial statements will be prepared according to the International
Financial Reporting Standards. There is increase in the revenue which helps in business
development. There is increase in sales which is caused by higher business volume. The
expenses and depreciation on equipment and operating leases have also increased.
Measurement
The consolidated financial statements of Mercedes Benz are prepared on the historical
cost basis but there is an exception that certain items are available for the sale of financial assets
which have the obligations. The International Accounting Standard Boards and the Financial
Accounting Standards Board measurement is followed by Mercedes Benz
Accounting Theory
The financial statements of Daimler AG are followed as per German Commercial Code
(HGB).The items are represented in the balance sheet of the company. The financial statements
are prepared according to the German Accounting Directives Implementation Act .In this
legislation the operating income is partially represented as revenue (Clarke, 2015).
Internal controls

3
FINANCIAL ACCOUNTING THEORY
The internal control for the Company and the risk management system refers to the
process of ensuring the effectiveness of the financial reporting. It is according to the
internationally recognized framework which follows the internal control, and is continually
developing the accounting and financial reporting process. The group of Mercedes has followed
the financial and reporting valuation systems which are accounted for and is disclosed (Colomar
et al, 2014).
Management and the Board of Directors
The company has provided during the reporting period the developments in the company.
The Advisory Board for Integrity and Corporate Responsibility plays an important role in the
growth of the organization. This includes the entire team of expert, representing the management
or the Board which help in both the constructive and external development of the environment.
The members of the Board play a vital role in maintaining the ethical issues and integrity of the
organization (Mareque, López-Corrales & Pedrosa, 2017).
Remunerations
The remuneration is given to all the people working in the organization. The Board and
the management participate to fix the remuneration of the Board and the executive. The member
of the management is able to participate in the area of compliance. The interests of the
stakeholders, the owners of the Company and the employees, are harmonized through the focus
on the Group’s long-term success. The Presidential Committee meets every year and it prepares
the remuneration statement which is again presented and reviewed by the Supervisory Board and
then the level of remuneration is fixed on that basis by comparing with the competitors
(McCaffrey, 2014).

4
FINANCIAL ACCOUNTING THEORY
Compliance Management System
The compliance system is based on the International standards which supports the
operations of the business units. The team reviews whether the system is effective or not. They
review the legal requirement system which helps in the continuous improvement of the
compliance system with regard to the compliance and the technical regulation. They also follow
the whistle blower policy.

5
FINANCIAL ACCOUNTING THEORY
References
Clarke, C. (2015). Automotive production systems and standardisation: from Ford to the case of
Mercedes-Benz. Springer Science & Business Media.
Colomar, M., Cafferata, M. L., Aleman, A., Castellano, G., Elorrio, E. G., Althabe, F., &
Engelbrecht, S. (2014). Mode of childbirth in low-risk pregnancies: Nicaraguan
physicians’ viewpoints. Maternal and child health journal, 18(10), 2382-2392.
Mareque, M., López-Corrales, F., & Pedrosa, A. (2017). Audit reporting for going concern in
Spain during the global financial crisis. Economic research-Ekonomska
istraživanja, 30(1), 154-183.
McCaffrey, T. M. (2014). Experts’ by experience perspectives of music therapy in mental health
care: a multimodal evaluation through art, song and words.