5 things you should know about financial report translations from German (IFRS)
Photo credit: Mathias Konrath
Financial reporting is an essential part of listed companies’ annual and quarterly reports. As such it forms an essential part of the communication with stakeholders and provides valuable information for executives. As business and investor relations have become international, this calls not only for accepted international reporting standards, but in the case of Germany also for precise financial translations.
The London-based IASB (International Accounting Standards Board) is an independent body that issues the most widely accepted accounting standard IFRS (International Financial Reporting Standards). As part of the European Union, German companies adhere to IFRSs for their financial reporting. While these reports are mostly written in German, there are many international stakeholders and publishing an English version of annual and quarterly reports is the norm.
IFRS Standards prescribe a specific structure, mandatory content and precise terminology for financial statements. German-to-English translators need to be familiar with this framework and stay up to date with the most recent terminology in both languages. As with all areas of translation, accounting has its regional idiosyncrasies. Read on to find out more about the most common traps and mistakes in IFRS translations from German to English.
Contents:
1. Depreciation, amortisation, impairment or write-down
2. Assets and liabilities
3. Using up-to-date IFRS terminology”
4. Don’t fall for the British/American trap
5. Watch out for “Denglish”
Bonus:
IFRS resources for the translation of annual reports
ESEF – new electronic format for financial reports
Let us consult you on the translation of your annual report!
1. Depreciation, amortisation, impairment or write-down
Possibly the most challenging term to translate in financial reports is “Abschreibungen”, as English has different terms for this depending on the type of asset and its value.
2. Assets and liabilities
Assets and liabilities are important parts of any statement of financial position, so it is important to translate them correct and consistently:
| non-current assets | langfristige Vermögenswerte |
| current assets | kurzfristige Vermögenswerte |
| non-current liabilities | langfristige Schulden |
| current liabilities | kurzfristige Schulden |
3. Using up-to-date IFRS terminology
The IRFSs are a work in progress as they must adapt to new regulations and developments in the world of business. Sometimes this comes with new terminology, so translators should always make sure their resources are up to date before they work on a financial report. These are some of the more recent updates:
| Bilanz | statement of financial position (formerly “balance sheet”) |
| Gewinn- und Verlustrechnung (GuV) | statement of comprehensive income (formerly “income statement”) |
| Eigenkapitalveränderungsrechnung/Eigenkapitalspiegel | statement of changes in equity |
| Kapitalflussrechnung | statement of cash flows (formerly “cash flow statement”) |
4. Don’t fall for the British/American trap
Apart from the general differences in spelling and punctuation, British and American English also have differences in terminology that are relevant for financial translators:
| British | American |
|---|---|
| financial year | fiscal year |
| one-off effect | one-time effect |
| as at | as of |
5. Watch out for “Denglish”
Literal translations often result in questionable style and sentence structure, but there are a few notorious phrases that are used frequently in German reports. A bad translation can produce results that range from confusing to offensive.
- Impuls: the English word “impulse” is a mechanical term, whereas German also uses it to refer to input, ideas or motivation.
- Bereits: “bereits” is used much more frequently than “already”. In most cases the tense of the verb implies the “already”, so it shouldn’t be translated.
- Vier-Augen-Prinzip: a questionable but widely accepted term in German, there is no “four-eyes principle” in English. “Double-checked” or “third-party review” work well in most situations.
- Sehr geehrte Damen und Herren: the generic German plural address can be translated very differently depending on context. In fact, a letter from the CEO will usually start without an address.
IFRS resources for the translation of annual reports
Up-to-date resources are the foundation of any professional IFRS translation. At EnglishBusiness, we use a combination of online dictionaries, exclusive inhouse resources and client-specific translations memories, term bases and style guides.
If you are looking for reliable information on current reporting standards, you can consult our experts or conduct your own research using one of these resources:
eIFRS – electronic International Financial Reporting Standards
eIFRS is the IFRS Foundation’s paid research portal.
Pros:
- Official IFRS resource
- Comparison tool to keep up with changes to the standards
- Simplified search with the eIFRS Terminology Lookup Tool
- Available in several languages
Cons:
- Not designed as a translation tool
- Steep price tag
Cost:
- £295 per year
Wiley Interpretation and Application of IFRS Standards
Wiley’s book offers a complete and up-to-date explanation of all IFRS requirements, coupled with examples of how to apply the rules in complex, real-world situations.
Pros:
- One-stop resource for understanding current IFRS. Indispensable guide, background information
- Complete and up-to-date explanation of all IFRS requirements, coupled with examples of how to apply the rules in complex, real-world situations.
- Upgrades your bookshelf as a Zoom background
Cons:
- Since the IFRS are updated every year, this becomes an annual purchase.
Cost:
- Print: $115
- e-book: $92
International Financial Reporting Standards (IFRS) by Wiley
A bilingual edition of the IFRS as a resource for German-to-English and English-to-German translators.
Pros:
- Clear comparison of the English source text and its German translation.
- Affordable price
Cons:
- No electronic searchability
- Needs to be replaced annually
Cost:
- Softcover edition: €29.99
Deloitte Model IFRS Financial Statements
Deloitte’s sample financial statement in English and German illustrate the impact of the application of the IFRS.
Pros:
- Extensive research material on the application of the IFRS
- Terminology research by comparing the English and German versions
Cons:
- Research is complicated by two separate PDF documents
Cost:
- Available free of charge
BDÜ seminars for financial translators
We often recommend a seminar at the BDÜ to aspiring German to English or English to German financial translators. You get an introduction to financial reporting or can brush up your knowledge if you have translated annual reports in the past.
ESEF – new electronic format for financial reports
Numbers are an integral part of any financial report. The European Single Electronic Format will make it easier to compare the figures and applies as of the 2020 financial year. The new standard enables different programmes to extract and analyse data. Find out more about the ESEF and the XBRL file format here.
Let us consult you on the translation of your annual report!
Do you have any questions regarding the translation of your annual report, CSR report or quarterly report? The team at EnglishBusiness has more than 20 years of experience translating for listed companies in Germany and abroad. Just contact our consultants to find out more!
