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Not to be omitted from financial statements

Which areas should you focus on when preparing financial statements in today's economic climate? In this newsletter, we outline some areas that might be of particular interest to you in this rather difficult economic period.

• Valuation of fixed assets and impacts of possible asset value impairment – Section 25 (2) of Act No. 563/1991 Coll. on accounting – stipulates that, upon valuation of assets at the balance sheet date, accounting entities must take into account any and all risks and losses arising from asset value impairment
• Restructuring plans and associated redundancy of tangible and intangible assets
• Value impairment of shareholdings due to significant or material impact of poorer results of subsidiaries or related persons
• Lower market value of fixed assets in question
• Unprofitable contracts – requiring creation of reserves
• Receivables and provisions – we do not recommend reliance on standard calculation methods, but to assess recoverability of receivables in respect of debtors’ current situation
• Deferred tax liability – which can represent a specific area in the event that it is recorded based on estimates of future tax gains which, in the current situation, can change
• All the entity’s estimates contained in the financial statements (e.g. depreciation of machinery, provisions, etc.), namely estimates of real value of real estate, should be assessed in respect of the current situation and the prudence principle
• Impact assessment of post balance sheet date events – e.g. dismissal of employees that took place in March should be analysed in terms of the date of the decision, and whether or not respective reserves should have already been created in the previous accounting period
• Assessment of the performance of contractual obligations towards creditors, and potential risks arising from failure to perform such obligations – which could result in early maturity of credits and thus threaten the entity’s going concern in the foreseeable future
• The management of the entity should also assess the risks of depending on certain suppliers; namely the threats these suppliers are facing in the current situation that could jeopardise supplies.
  If you have any questions regarding the issues discussed above, please do not hesitate to contact us.

Hana GREGÁSOVÁ, Manager, TACOMA Audit
Tel: +420 226 219 000
E-mail: hana.gregasova@tacoma.eu  
www.tacoma.eu