Professional Judgment And Creative Accounting Under Ifrs In Ex-Communist Countries: Case Of Romania
AbstractThe accounting rules from each country evolve in time in order to respond the social, cultural and economical environment needs. After some communist countries (as Romania, Bulgaria, Poland, Hungary, Czech Republic, Slovenia, Estonia, Lithuania, s.o.) joined the European Union an important number of local companies became to apply accounting regulation according with International Financial Reporting Standards (IFRS). This paper surveys the theoretical and empirical literature on the possible risks for companies' management from ex-communist counties by applying (mandatory or voluntary) International Financial Reporting Standards reporting regulation and professional judgment. Under the pressure of economic globalization all the ex-communist countries ware obliged to adopt International Financial Reporting Standards in the field of accounting. The main objective of this paper is to find out from the experience of different companies who already adopted IFRS which are the risks related to professional judgment application under IFRS on the financial statement users. As research methodology we integrated theoretical and empirical studies from accounting and law (especially from Romanian experience) in order to contribute to the cross-fertilization of our field of interest. As final results of our paper we find that the biggest risk of applying professional judgment prescribed by IFRS in ex-communist countries is to appear different creative accounting techniques which influence in a negative way the decision-making process for the financial statements users. During worldwide financial crisis the majority of Romanian companies tried to use in the most appropriate way the professional judgment in order to arrange their financial reports and to save company's money (in relation with local government) or to show higher performance (in relation with financial institutions) for the fund-raising process We identified several motivations including the existence of tax levies based on income, confidence by shareholders and workers in management that is able to report stable earnings and psychological expectations relating to increases or decreases in anticipated income.
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Bibliographic InfoArticle provided by University of Oradea, Faculty of Economics in its journal The Annals of the University of Oradea. Economic Sciences.
Volume (Year): 1 (2011)
Issue (Month): 2 (December)
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Postal: Universitatii str. 1, Office F209, 410087 Oradea, Bihor
Fax: 004 0259 408409
Web page: http://anale.steconomiceuoradea.ro/
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professional judgment; IFRS; globalization; creative accounting; risk;
Find related papers by JEL classification:
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Axel Haller, 2002. "Financial accounting developments in the European Union: past events and future prospects," European Accounting Review, Taylor and Francis Journals, vol. 11(1), pages 153-190.
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