Proceedings

• Voluntary application of the IFRS in consolidated statements of non-listed
companies and simultaneously
� compulsory application of local GAAP in individual statements (e.g. the
Czech Republic before 2010);
� right of choice between local GAAP and IFRS in individual statements (e.g.
the Netherlands, the Czech Republic after 2011).
• Compulsory/voluntary application of the IFRS in individual statements of nonlisted
companies (e.g. Denmark, Estonia, Finland, Ireland, the Netherlands,
Poland, etc.).
As far as financial reporting concerns, three groups of Czech companies can be
recognised. To summarise, provisions of the Czech Act on Accounting distinguished
following groups of companies until 2010:
• Category I (very heterogeneous bulk of Czech companies that are publicly
traded on stock exchanges in the EU markets – IFRS reporting only):
These entities have both to account for their transactions and to prepare their financial
statements (both individual and consolidated) using the IFRS. These companies are
not required to prepare their financial statements according to the Czech Accounting
Standards (further “CAS”) as financial statements prepared in accordance with the
IFRS are also accepted for the statutory purposes.
• Category II (majority of big companies, small and medium-sized enterprises –
both CAS and IFRS reporting):
This category covers a diverse group of companies, for which the common feature is
that companies in question are not a direct issuer of publicly traded securities.
Nevertheless, their owners are such issuers. Therefore, the companies belonging to
this category shall prepare their individual financial statements in accordance with the
CAS for statutory purposes. In addition, they are supposed to provide their parent
companies with financial statements and other information needed for consolidation
in compliance with the IFRS. Act on accounting until 2010 did not permit any
voluntary application of the IFRS instead of the CAS by this kind of entities.
Companies preparing consolidated financial statements voluntarily pursuant to §23a,
article 2 may be also subsided in this group.
• Category III (Small and medium-sized enterprises – only CAS reporting):
Category III covers family owned companies and other companies that are neither
direct, nor indirect issuer of publicly traded securities. They shall account for and
report in accordance with the CAS (again without possibility to apply the IFRS
voluntary).
Provisions of Act on accounting required mandatory application of the IFRS not only
in consolidated financial statements of listed companies (pursuant to Regulation
1606/2002), but also mandatory application of the IFRS in their individual statements.
Individual financial statements are accepted for statutory purposes levied by the
Commercial Code and are submitted to Business Register. That means that listed
companies (Category I companies) are not engaged in the process of financial
statements conversion, as both individual and consolidated financial statements are
prepared according to the IFRS and no additional set of financial statements prepared
in accordance with the Czech Accounting Standards (CAS) is necessary.
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