FINANCIAL INSTRUMENTS UNDER THE IFRS – A PRIORI ANALYSIS FROM THE CZECH AND ROMANIAN REGULATIONS’ PERSPECTIVE
Supp/2008 , p706..719
Author(s):
Jiri STROUHAL
Dumitru MATIŞ
Carmen Giorgiana BONACI
Keywords:
Financial instruments, fair value, regulatory bodies, standard setting
Abstract:
Accounting for financial instruments brought considerable debate through time, highlighting both conceptual and technical issues, which apparently seem to be far from resolved. Our analysis shows that the main holding back when it comes to reporting for financial instruments under IFRS and rejection of their full endorsement, even within the European Union, is mostly related to the value relevance of the information given through the present value of financial instruments within financial statements. We have conducted an economic (a priori) analysis which emphasizes the fact that both FASB and IASB stress the capacity of market values to incorporate, in an efficient and virtually unbiased manner, market consensus expectation about future cash flows. Once regulatory bodies adopt a financial reporting paradigm, it becomes the guiding principle for accounting regulation, that is, standard setting. We therefore went forward into analyzing the current situation regarding reporting for financial instruments under IFRS in the specific case of the Czech Republic and Romania, by asseaying the corresponding national regulations, and then empirically testing the similarities between them and also in connection to the international framework.
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