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Flag of the Czech Republic

Czech Republic
Česká republika

Czech Republic

Capital (and largest city):
Prague

Official languages:
Czech

Contact at the CFRR:
Pascal Frèrejacque
Tel: +43 1 2170714
pfrerejacque@worldbank.org

Czech Republic

The Czech Republic started moving towards a market economy after the fall of the communist government in Czechoslovakia in 1989. A wide range of reforms were implemented, including steps towards setting up a national system for corporate financial reporting. The first World Bank report on the observance of standards and codes in accounting and auditing (A&A ROSC) in the Czech Republic was published in July 2003 and made a range of recommendations for improving the frameworks for accounting and auditing in the Czech Republic.

The Czech Republic has been a member of the European Union since May 2004 and its legal and institutional framework for financial reporting is aligned with the EU acquis. However, there is still room for progress in implementing the provisions of the acquis. In particular, there is a need to improve the operation of the system of public oversight and to strengthen the capacity of the auditing profession to implement the provisions of the Statutory Audit Directive. The projects organized under the Czech Republic's FRTAP program are designed to address these issues.

The Czech Republic is part of the following programs at the CFRR:


Background


Economic and Business Background for the Czech Republic


Doing Business 2015

"Doing Business" Results for the Czech Republic

The World Bank's annual "Doing Business" reports provide objective measures of the impact of business regulations and their enforcement in 183 economies across the world. Please, visit doingbusiness.org for more information.




Background Economic Indicators

All the data is taken from World Development Indicators (WDI), which is the primary World Bank collection of development indicators, compiled from officially recognized international sources. It presents the most current and accurate global development data available, and includes national, regional and global estimates.













ROSC


Executive Summary of the 2003 A&A ROSC for the Czech Republic

Financial reporting and auditing requirements in the Czech Republic are currently in transition from compliance with national standards to compliance with International Accounting Standards (IAS), International Standards on Auditing (ISA), and the European Union (EU) Directives.

In law, the Czech Republic seeks to attain maximum compliance with the EU Fourth and Seventh Directives and the EU Regulation on the use of IAS, and to create an environment for implementation of IAS for the financial statements of public interest entities by 2005. Small- and medium-size enterprises prepare their financial statements in accordance with Czech Accounting Standards, which are largely based on the EU Directives and IAS. In practice, compliance with certain complex EU Directives and IAS requirements, including those dealing with consolidation and deferred tax, has been delayed. Compliance with IAS is not effectively enforced at present.

The transition to full IAS compliance for public interest entities will be demanding. It requires extensive education in a different style and philosophy of accounting requirements. The transition to full IAS will require a culture shift to reduce the influence of tax accounting on general-purpose financial statements.

In law, the Czech Republic seeks to attain compliance with the EU Eighth Directive and ISA. There are, however, serious issues because Czech Standards on Auditing remain less robust than ISA, the Chamber of Auditors in the Czech Republic (CACR) has not adopted the International Federation of Accountants Code of Ethics, and certain EU Recommendations on auditor's independence and quality assurance have not yet been endorsed. While the CACR is aware of the challenges it faces, the transition to full ISA audits requires extensive education and strict enforcement of standards.

This report draws upon recent international experience in developed economies and accession countries, as well as expected amendments to EU Directives, and recommends that the current self- regulation of the audit profession should be reviewed and an adequate oversight mechanism be established.

Contact


Pascal Frèrejacque

Pascal Frèrejacque

Pascal Frèrejacque, is a financial reporting specialist at the CFRR. Pascal has led Accounting and Auditing Report on the Observance of Standards and Codes assessments in a number of countries and advises governments on the design and implementation of corporate financial reporting reforms.

He brings to the Bank 18 years of international experience in accounting and auditing in the banking sector, having worked at the IMF and international accounting firms. As a former audit lead manager for large banking groups and having managed corporate finance assignments at Arthur Andersen and Ernst & Young, Pascal has an in-depth understanding of the financial sector. He started his career working for a private consultancy, conducting valuation and M&A due diligences for large corporations.

Pascal holds a post-Master's degree in accounting, finance and business administration and a Master's degree in economics from the University of Paris II. He speaks French and English.







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