Proceedings

USE OF FINANCIAL SECURITIES IN THE CZECH
REPUBLIC: SOME EVIDENCE FROM SMES
Jiřν STROUHAL 1 & Marie PASEKOVÁ
University of Economics Prague, Czech Republic
Eva HRUBOŠOVΑ
Tomas Bata University in Zlin, Czech Republic
Carmen Giorgiana BONACI
Babes-Bolyai University, Romania
ABSTRACT
The international accounting harmonization process and recent developments in international
financial reporting standards determined a shift in accounting paradigms from historical cost
accounting towards fair value accounting. Our paper analyzes how this shift impacted upon
Czech accounting by particularly focusing on reporting for securities. Extending the objective
of our paper, we assess the current status in terms of securities being used by small and
medium-sized entities and entities’ ability to measure these financial instruments. The
developed analysis relies on information being collected through the use of a questionnaire
based survey. Finally we conclude through a comparative approach of Czech accounting
regulations and International Financial Reporting Standards in the area of financial
instruments.
KEYWORDS: financial securities, financial reporting, measurement, SMEs, financial
derivatives, Czech Republic.
INTRODUCTION
Searching for the solutions of measurement issues represents one of the key problems
analyzed within current research. There may be seen a conflict between the
requirements for relevance and timeliness of measurement on one side and the
reliability and conclusive evidence on the other side. However, it shall be stated that
the important problem of measurement issues is the possibility of subjective
manipulation with values, which is possible when using certain measurement bases.
Actual economic environment strongly affects the requirements for measurement
requested from users.
When considering an economic boom there can be seen higher optimism of investors
which leads towards requirement of measurement of all accounting items at fair
values, which mainly represent current market prices of assets. Using this concept
means the turn from the prudence principle and conservative historical costs concept
in financial accounting. Moreover fair value concept in financial accounting leads to
higher tendency of revaluation assets or liabilities affecting profit or loss of the
company.
1
Correspondence address: Jiřν STROUHAL, University of Economics Prague, Czech Republic;
email: jiri.strouhal@vse.cv
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