The Role of Accounting Information in Financial Performance Measurements from External User's Viewpoint

Zbyněk Halíř

doi:10.18267/j.efaj.48

Abstract

The paper concerns measuring and reporting of financial performance of an enterprise from external user's point of view. Basic approach of the paper is the analysis of the Income Statement as amended by US GAAP. If it is appropriate wording of US GAAP is enriched by requirement of IAS/IFRS. The paper comes from following premise: Advanced accounting systems of the world could be rich sources of inspiration that would help to improve the Czech accounting legislation, the Czech accounting standards and their interpretations. Where it is appropriate the paper also brings inspiration for solving partial inconsistencies between IAS / IFRS and US GAAP. It gives some recommendations for continuing the harmonization process of both accounting systems in the field of measuring and reporting of financial performance.

Highlights

Ensuring a satisfactory performance level is one of the fundamental prerequisites for the successful development of each company
Securing abundance of high quality information, which reflect the level of business performance and help all involved bodies to understand in what direction and why the performance is developed, as well as the possibility of controlling the way they should develop, requires the existence of quality and complex information system and management control system
# The article is processed as an output of a research project The Role of Accounting Information in Financial Performance Measurements registered by the Internal Grant Agency (University of Economics, Prague) under the registration number F1/21/2010 and research plan Development of Accounting and Financial Theory and its Application in Practice from Interdisciplinary Point of View under the registration number MSM 6138439903

Summary

Introduction

Ensuring a satisfactory performance level is one of the fundamental prerequisites for the successful development of each company. US GAAP have undergone continuous development since the early 1930s, when it began to emerge as a consequence of the stock market crash of 1929 and subsequent economic crisis It was because of the widespread perception that an absence of uniform and stringent financial reporting requirements had contributed to the rampant stock market speculation that culminated with the collapse of the stock market and that destroyed the entire economy of the United States.[6] In the course of time the system has gradually been updated and amended.[7] The precedents from previous lawsuits have brought many changes in the understanding of the regulation. In connection with measuring and reporting of financial performance, one of the most important manifestations of an absence of a conceptual framework are unclear and economically incorrect definitions of expense and revenue in the Czech accounting legislation. SFAC 6 separates elements of business performance, which come from the entity’s ongoing major or central operations (core business) from those which come from peripheral or incidental transactions

Comprehensive income

31 December 2009

22 Accounting for the Impairment or Disposal of Long-Lived Assets

Conclusion