Enforcing Financial Reporting Standards: The Case of White Pharmaceuticals AG

Posted: 18 May 2011 Last revised: 6 Sep 2011

See all articles by Henning Zülch

Henning Zülch

HHL Leipzig Graduate School of Management

Dominic Detzen

Handelshochschule Leipzig (HHL)

Date Written: May 1, 2011

Abstract

This instructional resource is based on an actual case of financial reporting enforcement and invites students to reflect on two main themes: the treatment of research and development costs and the enforcement of financial reporting standards. First, students are to analyze a cooperation agreement under which German company White Pharmaceuticals AG receives access to the research and development results of their U.S.-based partner. While applying managerial judgment in interpreting the transaction, students review the treatment of internally generated and separately acquired intangible assets under IFRS and US GAAP. In addition, they are asked to discuss the convergence of the two major accounting regimes. Second, the case study fosters students’ understanding of how financial reporting standards are enforced when the German Financial Reporting Enforcement Panel (FREP) starts an investigation into how White Pharmaceuticals AG accounted for payments that the company conducted in the course of the cooperation. Students become aware of the consequences such an investigation may have as the FREP finally adjudges that White Pharmaceuticals AG should restate their financial statements.

Keywords: Financial Reporting Enforcement, Research and Development, IFRS

Suggested Citation

Zülch, Henning and Detzen, Dominic, Enforcing Financial Reporting Standards: The Case of White Pharmaceuticals AG (May 1, 2011). Issues in Accounting Education, Vol. 26, No. 3, pp. 619-632, 2011. Available at SSRN: https://ssrn.com/abstract=1844107

Henning Zülch

HHL Leipzig Graduate School of Management ( email )

Jahnallee 59
Leipzig, Saxony D-04109
Germany
+49(341)9851701 (Phone)
+49(341)9851702 (Fax)

HOME PAGE: http://www.hhl.de/faculty-research/faculty/accounting-auditing/

Dominic Detzen (Contact Author)

Handelshochschule Leipzig (HHL) ( email )

Jahnallee 59
Leipzig, D-04109
Germany

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