The Specifics of Forced IFRS Adoption by Czech Private Companies: A pilot field study
The Specifics of Forced IFRS Adoption by Czech Private Companies: A pilot field study

Author(s): David Procházka
Subject(s): Business Economy / Management, Accounting - Business Administration
Published by: Masarykova univerzita nakladatelství
Keywords: IFRS adoption; forced adopters; private companies; parent-subsidiary links;
Summary/Abstract: The adoption of International Financial Reporting Standards (IFRS) around the globe is one of the most challenging events in accounting area of the last decade. The accounting research focuses mainly on the outcomes of mandatory IFRS adoption by listed companies and partially on the determinants of voluntary IFRS adoption by other firms. However, some countries put restrictions on voluntary adoption by unlisted companies and require them to retain the reporting under local GAAP regime. This restriction challenges especially such subsidiaries, for which their parent company prepares IFRS consolidated financial statements. The subsidiaries shall then assure the preparation of two sets of accounting information – public financial statements in compliance with local GAAP for statutory purposes and internal financial statements in compliance with IFRS for consolidation purposes of the parent company. The relation between cost and benefit of such forced IFRS adoption is unclear, which may endanger the quality of information submitted by subsidiaries to parents. This paper investigates specifics of forced IFRS adoption in transition country, applying a qualitative pilot field study by three Czech companies.

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