European Financial and Accounting Journal, 2009 (vol. 4), issue 1

Introduction

New Year Means New Challenge

Petr Marek

European Financial and Accounting Journal 2009, 4(1):4 | DOI: 10.18267/j.efaj.59  

Dear readers, New Year means New Challenge. At the beginning of every year it is obvious common to make New Year's resolutions. The task for this year might have become to overcome financial crisis. Ambitious objective claims great acts. Economic theorists including experts, who did not expected any arrival of financial crisis to the last minute, offer large scale of proposals. Solutions are various and very often contradictory. On the one hand there are state subsidies and more extensive regulation, and on the other hand there are cancellation of whatever regulation and adjudication of superior power for the invisible hand of the market. As it would...

Articles

Have IFRS Positive Impact on the Regulatory Accounting Systems in Continental European Countries?

Marcela Žárová, Ladislav Mejzlík

European Financial and Accounting Journal 2009, 4(1):5-24 | DOI: 10.18267/j.efaj.60  

This article investigates statement that IFRS have positive impact on the regulatory system in continental European countries. The accounting regulatory system is used for the purpose of investigation. Authors of the paper developed theoretical scenarios of potential development of the accounting system in the Czech Republic. Rigid architecture of the accounting system, rigid set of accounting rules with no tradition of accounting profession, were considered in the development of potential accounting systems in the Czech Republic. Steps of IFRS implementation are monitored and partial implementation of IFRS into Czech accounting standards are under...

Role of Budgeting in Modern Corporate Governance (Empirical Study in the Czech Republic)

Jana Fibírová, Libuše Šoljaková

European Financial and Accounting Journal 2009, 4(1):25-36 | DOI: 10.18267/j.efaj.61  

The differing opinions of both experts and managers on the application of budgets in the dynamic changing business environment were inspiration for the empirical study that is oriented on the importance of budgets to performance management. The paper results from the empirical research. Analyses and conclusions presented in this paper cover the following issue: The first part analyses changes in the application of budgets in recent years and the indicators of these changes. The second part is oriented on the opinions of managers of budgets and explores whether managers consider budgets an important management tool supporting and improving Corporate...

The Hicks' Concept of Income and Its Relevancy for Accounting Purposes

David Procházka

European Financial and Accounting Journal 2009, 4(1):37-60 | DOI: 10.18267/j.efaj.62  

The paper analyses the possibility of using the economic concept of income introduced by J. R. Hicks for accounting purposes. Despite some disadvantages hindering from its broader practical utilization, this concept still finds its place in the area of managerial accounting and capital maintenance. Some aspects of Hicks' income concepts can be even found in International Financial Reporting Standards.

Unexpected Recovery Risk and LGD Discount Rate Determination

Jiří Witzany

European Financial and Accounting Journal 2009, 4(1):61-84 | DOI: 10.18267/j.efaj.63  

The Basle II parameter called Loss Given Default (LGD) aims to estimate the expected losses on not yet defaulted accounts in the case of default. Banks firstly need to collect historical recovery data, discount the recovery income and cost cash flow to the time of default, and calculate historical recovery rates and LGDs. One of the puzzling tasks is to determine an appropriate discount rate which is very vaguely characterized by the regulation. This paper proposes a market consistent methodology for the LGD discount rate determination based on estimation of the systematic, i.e. undiversifiable, recovery risk and a cost of the risk.