Towards IFRSs in Czech or not? Positioning the SMEs representatives view

The small to medium-sized enterprise (SME) sector has an irreplaceable role in the context of the market economy. SMEs represent over 1 million economic entities in the Czech Republic, i.e. 99.84 % of all entrepreneurs. Czech SMEs employ more than 1.8 million employees and participate in approximately 51 % of all Czech exports and about 56 % of all Czech imports. SMEs play a major role for the development of the endogen potential of individual regions in the Czech Republic, as they are entrepreneurially and socially connected to a given region in a significant way and make up the regional entrepreneurial backbone (Businessinfo, 2012). This paper aims to evaluate the level of harmonization of accounting in Czech SMEs as well as the impacts arising from the international accounting harmonization process. Our research included a survey among 157 SMEs on the basis of structured interviews. All approached businesses fell into the category of small and medium sized enterprises as classified according to International Financial Reporting Standards (IFRS). The interviews ascertained whether the business is connected with a foreign partner, whether it reports according to IFRS at present, possibly whether they are planning to report according to IFRS in the future and how they view the benefits stemming from the use of IFRS. The survey has proved that if SMEs are not immediately obliged to prepare financial statements in accordance with IFRS, they are not interested in the area of international accounting. The predominant view among Czech SMEs is that possible implementation of IFRS would bring any advantages to them. They just see advantages in unification, common comparable reporting of results of economic activity, followed by credibility of the business, reporting benefits and strengthening business’ prestige. As regards providing information about their enterprise on the market, they see more disadvantages than advantages such as improved competitive ability stemming from greater transparency of the business. This paper is one of the research outputs of the research projects IGA/FaME/2013/002 “The model of comprehensive evaluation of the debt ratio of small and medium enterprises with regard to the risk of insolvency” and IGA VŠE 2/2014 “Reporting of listed and nonlisted companies in selected EU countries and China”.