IFRS Standards
Czech Republic: Rigour and realism

Overview

Czech companies exhibit a strong mastery of the conversion process and declare themselves ready for the transition at a rate of 84%. 54% have already prepared their opening IFRS balance sheet.

Only 20% of companies find the application of IFRS to be costly, the second lowest rate in Europe. This is even more surprising in that Czech companies are those who have externalised their conversion: 92% compared to a European average of 59%. Further, 64% of companies believe that the costs are justified, which is the highest level in Europe (which averages 40%).

















Investor communication

The Czech companies surveyed seemed unconcerned about communication with investors (their rate is the lowest in Europe with only 29% having already effected communications), but they are quite prepared to issue annual reports at the same date as the preceding year (88%), which shows their advanced position in the conversion process.





Employee training and readiness

We note that while Czech companies have put in place relatively small internal teams (less than 6 employees), all personnel are deemed to have sufficient or excellent knowledge of the new standards and 84% of employees have received specific training, a remarkable rate compared to the European average of 73%.



Financial impact


This country's companies seem to have approached the transition calmly and with proper expectations, as 72% have found the impact of IFRS as expected (compared to 55% in Europe). Only 24% are concerned about increased volatility under the new standards, compared to a European average of 46%.

This smooth scenario may be explained by Czech companies' strong interest in the new standards: 56% (compared to 47% in Europe) believe that IFRS will improve the transparency of financial statements and 64% (62% across Europe) consider that the new standards will facilitate international comparisons.

Specific standards

Financial instruments and fixed assets stand out clearly as creating the greatest challenges in the view of Czech companies.

58% of the Czechs believe that the margin for interpretation will increase with the transition. This high rate compared to the European average is further supported by the following statistics: 76% of those interviewed would welcome more interpretation from IFRIC (compared 59% in Europe), and the demand for specific sector adaptations is also higher than the European average.



No Czech company would have preferred specifically European standards, while 20% would have opted for U.S. GAAP over IFRS, compared to an average of 14% across Europe.