Abstract
The EC 4th Directive has been in force since 1978, at least till 2001 without fundamental changes. Nearly the same history concerns the EC 7th Directive, firstly issued in 1983. Then new requirements, such as new disclosures and valuation rules, including provisions on fair value accounting, have been added. Less attention has been paid to considering whether existing requirements could be simplified or removed. Research studies confirm that amendments have tended to ignore the comparability and usefulness of the financial statements, increased reporting requirements and the number of Member State options. All these facts have ultimately, in the long run, led to increased complexity and regulatory burden for all companies. European Commission proposed to simplify the 4th and 7th Council Directives as regards financial information obligations and to reduce administrative burdens, in particular for SMEs. This article investigates impact of new Directives' financial reporting requirements on presentation of financial statements of companies those use local regulatory rules, which should comply with the Directive of June 26, 2013 repealing the 1978 and 1983 Directives and their subsequent amendments, in the Czech Republic. Conclusion from this article might be useful for practice as for the potential future changes in presentation of financial statements or researchers who find out similarities or differences between European accounting systems.
Highlights
One of useful analysis on financial reporting needs of companies and determination of levels of financial reporting regulation has been prepared by the UNCTAD (2007) nearly ten years ago
Conclusion from this article might be useful for practice as for the potential future changes in presentation of financial statements or researchers who find out similarities or differences between European accounting systems
Modernisation of the EC 4th Directive that has been in force since 1978 and the EC 7th Directive has been awaited for rather long period
Summary
One of useful analysis on financial reporting needs of companies and determination of levels of financial reporting regulation has been prepared by the UNCTAD (2007) nearly ten years ago. Where the application of this Directive would not be sufficient to give a true and fair view of the entities' assets, liabilities, financial position and profit or loss, such additional information as is necessary to comply with that requirement shall be given in the notes to the financial statements. Comparison of balance sheet according to new Directive and Czech regulations The proposed Directive proposed only one balance sheet layout, whereas previously the Member States could choose between two different layouts This would ensure better comparability of the financial statements from one jurisdiction to another in the EU. Following tables bring comparison of line items in balance sheet determined by the new Directive with present reporting requirements set up by the Czech regulatory rules. Loans to undertakings with which the undertaking is linked by virtue of participating interests
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