Proceedings

Pirchegger (2006) is concerned with the fact that accounting units tend to note
primarily the high level of disclosure obligations in relation to hedge accounting and
the costs related thereto. On the other hand, the primary goal of the standard-issuing
authority is the incontestable effort to provide investors with highly relevant
information. The fact that the information on hedge accounting should form an
indivisible part of the financial statements is motivated by the effort to assure
investors that the criteria applicable to the field of hedge accounting were applied
correctly rather than by the fact that the information on hedge accounting causes
considerable additional costs to accounting units. The following figure provides
evidence on the use of hedge activities by tested companies.
All
Production
Trade
Services
Finance
not applied
fair value hedge
cash flow hedge
hedge of net foreign operation
All
~ 313 ~
Finance
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
The obtained results document that the analyzed entities remain conservative with
regard to hedge activities which appear as new or little known in the Czech Republic.
The reason behind these results might be due to these types of contracts being
considered as risky. Furthermore when considering the Czech analyzed entities’
portfolios we mainly find shares and debt securities, bills of exchange and checks.
Meanwhile derivatives were mainly used within the manufacturing industry with
entities preferring the standard form of currency forwards, currency swaps, currency
options and currency futures.
FINAL DISCUSSION AND CONCLUSIONS
The most significant differences when comparing IFRSs with Czech accounting
regulations are related to the relatively low requirements on disclosure. Guidance
being offered in the area of reporting for financial instruments under IFRSs is mainly
considered to be solution focused. This is done by associated with the real issues, or
more precisely through the current market value of these instruments. This is due to
standard setters’ endeavor to provide investors with the latest available information
when preparing financial statements. This information is wanted to include all recent