Impact of accounting harmonisation on financial performance of SMEs in Visegrad Four countries

National characteristics (i.e. each country’s accounting culture and traditions) have developed over time in close relationship with the political, social and economic environment, and influence the way in which legislative requirements are applied. The Czech Republic, Slovakia and Hungary benefit from a common historical accounting background based on the Austrian accounting school. Polish accounting has a historical accounting background based on the German accounting school. From this point of view, the starting lines for the Visegrad Four (V4) countries were close to each other. During the 20^th century, countries created their own reporting backgrounds, which are now intended to be harmonised through European Union (EU) directives and International Financial Reporting Standards (IFRS).

In this research we analysed the major differences between local accounting legislature (known as de jure harmonisation) and practices (known as de facto harmonisation) with the international accounting referential being represented by IFRS. The reason for comparability with IFRS is the request for listed companies to prepare their consolidated financial statements based on IFRS framework.

Methodology applied for de jure harmonisation was based on application of Jaccard, Roger-Tanimoto and Spearman’s coefficients. The results show high comparability between Slovak accounting legislature and IFRS. De facto harmonisation analysis was based on interviews done with representatives of accounting professions in the respective countries – standard setters, auditors, accountants and academicians. A major output from the interviews is their perceptions of the costs and benefits of possible implementation of IFRS and the application of the implementation strategy. Representatives see one of the weaknesses of V4 accounting as the strong linkage between legislature and taxation and, from this point of view, one can see the possible shift towards IFRS as a significant burden for companies.