The Understandability of Financial Statements in the Decision-making Processes of Insolvency Proceedings
The Understandability of Financial Statements in the Decision-making Processes of Insolvency Proceedings

Summary/Abstract: A financial statement is the only source of information about the financial condition of an entity. Its wide use in bankruptcy prediction proves its informational value. In many countries, the financial statement or elements of it constitute a database of information on the bankruptcy process. The purpose of this paper is to analyse the theoretical and practical aspects of using financial statements as a source of information in the bankruptcy process when decisions are made about the future of the debtor company. Empirical research was carried out in four of 46 district courts conducting insolvency proceedings in Poland. The research showed that, at this stage, neither regulations nor court practice guarantee that the content of the financial statements used in bankruptcy proceedings is intelligible.

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