Work detail

Financial Accounting of Czech Republic

Author: Ing. Mgr. Václav Pačesný
Year: 1997 - summer
Leaders: Ing. Irena Kemény
Work type: Finance and Banking
Language: Czech
Pages: 0
Awards and prizes:
Abstract: This work briefly analyses the Czech financial accounting in the time of 1998. It was mainly the most determining and significant part of the overall accounting system -- double entry accounting for entrepreneurs -- that was put in focus. The author tried to describe the Czech financial accounting itself (functions, targets, particular forms of accounting) as well as the surrounding environment of the system, which contributes to forming it considerably (e.g.: political, legal, economic conditions...).
The work is introduced with the western world financial accounting characteristics, mentioning the two basic approach (Anglo-Saxon and Continental) and depicting the reasons and hitherto progress of international harmonisation.
In the following part, the attention is paid to the details of the Czech financial accounting, its targets, basic elements of the accounting system and also the outside environment of the system.
While assessing the Czech accounting, the author deals with its basic orientation and the particular way it heads forwards (Anglo-Saxon and Continental approach, international harmonisation and the national particularities, loose vs. tight rules). Then the basic assessment of the Czech financial accounting from the view of the most important groups of accounting information users follows. Problems with comparability, reliability and accessibility of important accounting information are mentioned in this part. One of the major reasons of such problems is that although the accounting information should primarily be designed for the needs of external users, financial accounting in the Czech Republic is deformed by the tax interests of the state on one side and the concerns of management to adjust their accounting results according to their needs on the other.
There are many aspects of the surrounding environment that influence the Czech financial accounting in a negative way. Some of them are hard to affect. Nevertheless, there are some others to deal with successfully (e.g.: tax laws, commercial law, requests of Prague stock exchange to release information and so on).
Accounting legislative of the Czech Republic as itself has reached satisfactory level. When forgetting about "details", it can be compared with the accounting legislative of European Union members. The bills (=law amendments) that are being prepared should improve the situation and help to harmonise the Czech system with the EU system. Apart from this direction, difficulties with using the law in practice can still be observed too.
When noting issues to be improved, general knowledge of basic accounting principles and methods, the awareness of overall system functions as well as the knowledge of accounting information efficiency are to be pointed out. Increasing the awareness level of our professional accountants and economists becomes a major target for the Czech schools of economics, Union of Czech accountants, private training agencies and big companies, which run their own educational projects.
Reaching higher quality level of the Czech accounting system will enable to distinguish between the companies and the way they work easily. This will help to decrease the economic environment uncertainty. Also investors, creditors, entrepreneurs, etc. will be able to get oriented more and better than now. When regarding the fact that accounting can positively influence the quality of its surrounding economic environment, it is highly advisable that the financial accounting system is always one step ahead of its environs.


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