Military industry in the Czech Republic and publishing of financial statements

In today's global economic environment, there is growing demand for information in the field of financial statements; each individual user wants these statements to be based on true, reliable, real and comparable information. Emphasis is placed on the harmonization of financial reporting and significant progress has been made within this area. Nevertheless, absolute consensus can only be achieved via a difficult and long-term process because individual countries have their own accounting policies based on different principles and rules. That is why the process of harmonization on the international level is lengthy and based on the compromises of all those involved in the harmonization process itself. One of the main legal obligations of the company, within all European Union (EU) member countries, is a presentation of financial statements. The obligation is based on Directive 2013/34/EU of the European Parliament and of the Council on annual financial statements. The main aim of this presentation of the financial statements is to protect owners, potential investors, and business partners as all business activities are associated with a variety of different risks. Therefore, every accounting entity should take these potential risks into account in its financial statements, in particular in the depreciation of assets, future cash outflow caused by current debts, or the use of hedging instruments resulting from a decrease in risks connected with asset outflows. This paper examines financial statements of all licensed companies operating in the military industry in the Czech Republic. We examine whether companies operating in the industry fulfill their legal duty to publish financial statements, the structure of the entities, the rate between audited and non-audited companies, and the division of companies in accordance with their size. We use a detailed analysis of financial statements from the Collection of Documents in the Business register and our sample consists of 237 accounting entities. The results provide statistical information about companies that do not fulfill their statutory obligation and do not publish financial statements for external users. Other results include the examination of legal forms of businesses that exist in the military industry of the Czech Republic, including the determination of the number of companies in the military industry whose financial statements must be audited by an external audit. The preliminary findings are that 22% of analyzed companies do not fulfill their legal obligation to publish their financial statements and 31% have audited financial statements.