Relationship between legislation and accounting errors from the point of view of business representatives in the Czech Republic

Abstract

Research background: Previous studies have demonstrated that providing relevant information to users is positively affected by higher quality of accounting standards and adhering to ethical rules and accounting principles by accounting professionals. On the other hand, there are a lot of cases when the law was broken. The most common reason for committing financial statement´s fraud include in-creasing stock prices, getting loans from bank or avoiding payment of taxes.
 Purpose of the article: The aim of this paper is to evaluate both the relationship between using of legislation and accounting errors rate in the financial statements as well as the possible using of creative accounting from the point of view of enterprises and non-profit organizations in the Czech Republic.
 Methods: Among the quantitative research methods the questionnaire was used. The questionnaires were sent out to randomly 201 selected enterprises and non-profit organization. The survey was conducted from September 2017 to the end of January 2018. The data were analyzed by means of the tools of descriptive statistics and the chi-square goodness of fit test. The research questions sought to investigate whether Czech Accounting Standards helped in all areas of accounting and reporting and avoiding of errors in financial statements, and whether the respondents encountered fraudulent procedures in compiling financial statements.
 Findings & Value added: The results indicated that using Czech Accounting Standards was perceived as a useful tool in solving all situations in areas of accounting and avoiding accounting errors. Moreover, it was proved that the volume and frequency of errors were not significant in financial statements.

Detecting earnings manipulation and fraudulent financial reporting in Slovakia

“…As Kramarova and Valaskova (2020) and Pasekova et al (2019) state, the reasons behind fraudulent financial reporting are different, including bias wrecker of tax duties. At the same time, Kramarova and Valaskova (2020) state that in the case of Slovakia, the main reason for fraudulent financial reporting is precisely this fact.…”

“…According to Gill (2004), the basic level of external control should be the financial statement analysis including its basis methods -horizontal and vertical analysis, since they may be helpful in discovering and examining unexpected relationships in financial data presented in the financial statements. Financial statement analysis based on financial ratios is also valuable in finding errors or fraud in financial statements (Pasekova et al 2019). E. g. the study by Pasekova et al (2019) revealed that the most preferable ratios in Czechia were indebtedness, liquidity, profitability, and activity ratios.…”

“…Financial statement analysis based on financial ratios is also valuable in finding errors or fraud in financial statements (Pasekova et al 2019). E. g. the study by Pasekova et al (2019) revealed that the most preferable ratios in Czechia were indebtedness, liquidity, profitability, and activity ratios. EBITDA seems to be significant for mainly managerial decisions.…”

“…The issue of earnings manipulation is a relatively frequently examined problem between academics and experts directly from practice (Homola & Pasekova, 2020;Pasekova et al, 2019). At present, there are various statistical methods or techniques of data collection that try to identify hidden, unusual or divergent patterns indicating financial fraud.…”

Financial Information and Management Decisions: Impact of Accounting Policy on Financial Indicators of the Firm

“…To be useful, financial information must not only be relevant, but it must also represent accurately the facts and trends it claims to represent (Paseková et al 2019). This fundamental characteristic seeks to maximize the underlying characteristics of completeness, neutrality, and freedom from error.…”