Comparison of Financial Reporting in the Visegrad Four Countries in a Global Environment

Czech University of Life Sciences Prague, Faculty of Economics and Management, Department of Trade and Finances, Kamýcká 129, 165 00, Praha 6-Suchdol, Czech Republic

^* Corresponding author: lorinczova@pef.czu.cz

Abstract

Research background: The Visegrad Four (V4) countries are the Czech Republic, Slovakia, Hungary and Poland. As members of EU they had to incorporate into their national legal accounting framework the European Directives related to annual accounts, valid at the time, where various choices were possible to adopt. Some principles of the international financial reporting standards IFRS also affected the national accounting frameworks more or less, depending on the country. These various influences may affect the external user´s ability to read the published financial statements and compare them.

Purpose of the article: The aim of this paper is to compare the relevant national legal framework of accounting in selected areas and the content of financial statements required in the V4 countries and to point out the influence of the chosen presentation of some financial information on selected indicators of financial analysis.

Methods: Methods of description, analysis, comparison and synthesis are used to achieve the set aims of the paper. The financial analysis is demonstrated on an illustrative example of reported financial information which is based on the different national accounting legislation.

Findings & Value added: The comparison showed some similarities and differences. The main differences amongst the V4 countries are related to the reporting of leased assets and the variation of own production and work-in-progress. Czech Republic does not report the leased assets in the balance sheet of the user of the asset but in the owner´s while the Slovak republic, Hungary and Poland report the asset in the user´s balance sheet which is in accordance with the international accounting standards IFRS (in case of Poland it depends on the lease contract). The Czech Republic reports the changes in own production and capitalization of own work as part of expenses which is in line with IFRS. The Slovak Republic, Hungary and Poland report these items as part of revenues which is in line with the EU Directive but in contrast with IFRS. Also, the Slovak republic and Poland have definitions of the elements of financial statements in their accounting legislation while the Czech Republic and Hungary do not have these definitions. These differences influence the results of ROA, ROE and cost efficiency when comparing the same situation in these countries as it is evidenced on the illustrative example in the paper.