Its spare parts are available for all vehicles. Under automative technology, Bosch engineers develop and test product innovations for motor vehicle manufacturers in research centers around the world. Bosch products go into serial production for new vehicles produced by many different manufacturers around the world once they have undergone extensive testing and meet its strict quality requirements. Bosch has contributed significantly towards making driving safer, cleaner and more economical being one of the largest manufacturers and suppliers of spare parts. (http://www.bosch.com/content/language2/html/3506.htm)
Bosch is also a major producer and mahufacturer of home power tools, household appliances, garden tools and heating appliances. At the industry and trade Bosch provides communications services, power tools for professionals, sensors and foundry, security systems and packaging technology.
The aim of this paper is analyse Bosch's 2005 annual report so as to assess the influence of institutional, cultural and external factors on the financial accounting and reporting system of Bosch. The rest of the paper is organised as follows:
Section 2 provides an analysis of the the institutional, external and cultural influences on the financial reporting system, and a classification for the Accounting system, Section 3 looks at the extent to which Bosch is related to the international Accounting standards (IAS/IFRS) of the International Accounting Standards Board (IASB) and Generally Accepted Accounting Principles GAAP of the US Financial Accounting Standards Board (FASB).
2. ANALYSIS OF THE INSTITUTIONAL, EXTERNAL AND CULTURAL INFLUENCES ON THE FINANCIAL REPORTING
2.1 Institutional Influences
2.1.1 Management Structure
The management structure has got an important role to play in the type of accounting system used. In the words of Hermann Scholl:
"Responsible corporate management is partly about striking the right balance - a balance between result focus and values such as responsibility, openness and trust, fairness, credibility,and cultural diversity. This is fundamental to long-term success."
(extracted from Bosch Group Annual Report, 2005).
According to the 2005 Annual Report the supervisory council is kept informed by the board of management throughout the year and give close attention at its meetings to business developments, corporate strategy, the financial situation, and investment plans. It receives briefings on and appraises the business environment, new engineering developments, and the competitive position of the individual divisions, quality issues and cost cutting measures. This has an influence on the system on the financial reporting system. Bosch announced in its 2005 annual report that it is adapting an IFRS based internal control system as from 2006 onwards. A monthly business report will be prepared and they explain that the system gives the board management a survey of developments on corporate, business sector, and division levels. Comparison is done via an actual-target comparison, which is based on the annual business plan. The business plan has a