Effects of Financial Accounting Harmonization on Agribusiness
Effects of Financial Accounting Harmonization on Agribusiness

Author(s): Lukáš Moravec, Jana Hinke, Gabriela Kukalová, Zuzana Tichá
Subject(s): Business Economy / Management, Agriculture, Transformation Period (1990 - 2010), Present Times (2010 - today), Accounting - Business Administration
Published by: Masarykova univerzita nakladatelství
Keywords: accounting; agriculture; changes; harmonization;
Summary/Abstract: Financial accounting is the most important tool for determining the financial position and performance of agricultural business. However, this is increasingly subject to the harmonization process. The first effort to harmonize financial accounting in Europe took place in the 1950s after the signing of the Treaty of Rome, and has been ongoing since then. Harmonization is currently being promoted through EU directives that are changing national legislation. The aim of this contribution is to quantify the impact of important changes (in financial accounting between 2004 and 2017) on the financial position and performance of agricultural business. The impact of the changes was quantified using the average values of a sample of 100 selected entities across the Czech Republic (i.e., joint stock companies, limited liability companies and cooperatives with primary agricultural activity). Average values are presented in the tables so that the effect of the change on the balance sheet and profit can be demonstrated. The data were obtained from the collection of commercial register documents. Important changes (specific for agriculture) have been found: valuation of assets, reporting of preferential limits, depreciation of permanent crops on foreign land and valuation of inventories of own production, reporting a change in their amount.

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