Czech Republic : Accounting and Auditing
Financial reporting and auditing requirements in the Czech Republic are currently in transition from complying with national standards to complying with International Accounting Standards (IAS), International Standards on Auditing (ISA), and the Eu...
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| Format: | Accounting and Auditing Assessment (ROSC) |
| Language: | English en_US |
| Published: |
Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2003/07/6555954/czech-republic-report-observance-standards-codes-rosc-accounting-auditing http://hdl.handle.net/10986/14464 |
| Summary: | Financial reporting and auditing
requirements in the Czech Republic are currently in
transition from complying with national standards to
complying with International Accounting Standards (IAS),
International Standards on Auditing (ISA), and the European
Union (EU) Directives. By law, the Czech Republic seeks to
attain maximum compliance with the EU Fourth and Seventh
Directives and the EU Regulation on the use of IAS, and to
create an environment for implementing IAS for the financial
statements of public interest entities by 2005. Small- and
medium-size enterprises prepare their financial statements
in accord with Czech Accounting Standards, which are largely
based on the EU Directives and IAS. In practice, compliance
with certain complex EU Directives and IAS requirements,
including those dealing with consolidation and deferred tax,
has been delayed. Presently, compliance with IAS is not
effectively enforced. The transition to full IAS compliance
for public interest entities will require extensive
education in a different style and philosophy of accounting
requirements. The transition to full IAS will require a
culture shift to reduce the influence of tax accounting on
general-purpose financial statements. By law, the Czech
Republic seeks to comply with the EU Eighth Directive and
ISA. There are, however, serious issues because Czech
Standards on Auditing remain less robust than ISA, the
Chamber of Auditors in the Czech Republic (CACR) has not
adopted the International Federation of Accountants Code of
Ethics, and certain EU Recommendations on auditor's
independence and quality assurance have not yet been
endorsed. While the Chamber of Auditors is aware of the
challenges it faces, the transition to full ISA audits
requires extensive education and strict enforcement of
standards. This report draws upon recent international
experience in developed economies and accession countries,
as well as expected amendments to EU Directives, and
recommends that the current self-regulation of the audit
profession be reviewed and an adequate oversight mechanism established. |
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