The Analysis of Irregularities in the Calculation of Depreciation of Fixed Assets in the Republic of Serbia

Abstract

The paper discusses theoretical and practical aspects of calculating depreciation of fixed assets in the Republic of Serbia. The aim is to investigate the practice of calculating depreciation of fixed assets in enterprises in the Republic of Serbia in order to determine the possible failure (irregularities) that may affect the overall quality of financial reporting. Correct calculation of depreciation of fixed assets provides a realistic representation of depreciation expenses in the income statement and real value of fixed assets in the balance sheet. Based on the research conducted, the paper will reveal systemic irregularities in calculation of depreciation of fixed assets. In this sense, we believe that the content of the paper and conclusions arising from it will encourage accountants in various companies to change the way of calculating depreciation of fixed assets.

Validity of investment loan approval model for SMEs in Serbia

“…Moreover, Jovin [23] confirmed that projections of future business of the SMEs are not reliable and that many business plans are prepared according to the "copy-paste" principle applied by external consultants in order to produce the paper requested by the bank (not in order to prescribe a proper business model for future development). Finally, Vasilski [34] and Sikimić [31] confirmed by examining two different SMEs credit portfolios that the most relevant factors for successful performance of a company are management and appropriate organizational structure and qualification of the employees.…”

“…that many companies perform business in the gray area, paying in cash without disbursing appropriate taxes to the state (the sample covered 129 SMEs and 80 credit risk managers in 15 banks in Serbia in 2015). Based on the survey conducted among accountants in major cities of Serbia (2015), it has been found that a small number of enterprises: (1) correctly calculate depreciation of fixed assets (which represent 60.36% of total assets of all legal entities that have submitted data for statistical purposes for 2014) [31], (2) use the prescribed regulations for the assessment of trade receivables depreciation while relying on no real analysis of the performed calculation to improve their performance in the upcoming reporting periods [35].…”