Implementation of international financial accounting standards from the perspective of companies in the Czech Republic

Abstract

The paper presents the results of a qualitative and quantitative research in the area of implementation and use of International Financial Reporting Standards into accounting system in the conditions of corporate practice in the Czech Republic. The purpose of the research is to identify, analyse and evaluate the current state and development of the use of International Financial Reporting Standards and subsequently generalise the advantages and disadvantages of the application of the International Financial Reporting Standards system from the perspective of companies. To conduct a quantitative research, a questionnaire «IAS/IFRS application at legal entities and legal persons in the Czech Republic» was sent to Czech companies in 2015 and 2016. It was filled in and sent back by 228 respondents (63 large enterprises, 114 medium-sized enterprises and 52 small businesses). Based on the results of the empiric research, the authors proposed recommendations and measures for innovation and implementation development of the International Financial Reporting Standards system in the conditions of corporate practice in the Czech Republic with the aim to help to increase the quality, reliability and informative abilities of corporate accounting information for the users of financial statement information of financial accounting. Although most of the surveyed enterprises see the advantages of the IAS/IFRS system, very few use it. The main reason is that the tax base for the income tax in the Czech Republic comes from the accounting economic result determined by the Czech accounting regulations which are still not sufficiently compatible with the IAS/IFRS standards. Furthermore, the implementation of IAS/IFRS, compilation of IAS/IFRS reports and their regular audit are quite expensive, and the Czech companies are not obliged or motivated by the state to use them, except for the listed on the European stock exchange. The situation may change if the companies were allowed to apply the IAS/IFRS for tax and accounting purposes, as it is in a number of EU countries. However, it would demand essential changes in the legal provision of accounting and tax policies. The research topic is discussed in professional auditing and accounting chambers and institutions. The individual member states of the European Union, as well as the Czech Republic, are currently working intensively on the transposition of European Union Directive 2013/34/EU, 2014/95/EU and 2015/2366/EU into their national accounting legislation. The authors of the paper want to contribute to the successful adaptation of the International Financial Reporting Standards system into corporate practice by their research.