Title: Recent History of Czech Accounting and SpontaneousHarmonization in the Age of IRFS
Abstract:Quality of information used by financial markets is dependent on quality of accounting reports. However, accounting is not used only on financial markets but principally for sound management of compan...Quality of information used by financial markets is dependent on quality of accounting reports. However, accounting is not used only on financial markets but principally for sound management of companies. Since 1970s there was an incentive to harmonize financial reporting around the world. In 1978 the 4 th EC directive came to force harmonizing the format if accounting and in 1983 the 7 th directive, which was supposed to harmonize the content of accounting statements. The reason behind the harmonizing effort was to enable more fluent trading and investment activities between the countries and to improve the quality of information through harmonization of reporting standards. In this contribution we aim to analyse the complexity of influences on used accounting standards using the historical analysis of accounting and financial reporting in the Czech Republic in the second half of the 20 th century. We aim to capture the legal and institutional underlining. Historically, it transpires that nowadays the IFRS are predominantly used by big or international companies, whilst the small companies use the IFRS rather sporadically because of high cost of compliance. On the other hand some SMEs use the IFRS voluntarily because of some particular business reasons. When the new system of accounting was set up in 1990s, there were also important influences of legal and institutional background. At this point the market was regulated by the Ministry of finance, which was not a professional organization as it is in Anglo-Saxon countries. Furthermore, the Prague Stock Exchange has only just started trading. The Act of accounting was effectively passed before the state enterprises were privatized. There were no private enterprises at that point of time. The development of important changes in accounting rules and general economic environment may also be one of the reasons why the IFRS is used by big enterprises and not by SMEs. However, supported by the globalization, we can observe strong features of spontaneous harmonization to global reporting standards.Read More
Publication Year: 2014
Publication Date: 2014-01-01
Language: en
Type: article
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