IFRS Survey 2011
Focus on financial reporting in Hungary
We are pleased to present our first comprehensive survey of the application of IFRS accounting standards by Hungarian companies. Our research is based on 2010 IFRS reports published by 20 corporate groups listed and 8 entities not listed on the Budapest Stock Exchange. In order to ensure the consistency of our analysis, we have extended our sample to financial institutions and banks, as they are subject to specific accounting requirements which are unique to these types of business entities.
Throughout the report, the results are compared to a similar survey performed by Deloitte in Switzerland. It proved a suitable benchmark to highlight the similarities with and differences from an independent and fully-fledged capital market where IFRSs are extensively used.
Due to turbulent and disadvantageous economic circumstances, a general business uncertainty and lack of trust can be observed on the markets. The management and accounting specialists of Deloitte Hungary have been emphasizing for years that the application of International Financial Reporting Standards may be a suitable tool in regaining this confidence. Companies applying IFRS could be more attractive to foreign investors as the transparent report is internationally comparable and makes it easier to recognize the potential business risks in the investments. Naturally, this requires professional IFRS reports in compliance with the international standards. Transposing the Hungarian report to IFRS is a time-consuming procedure and not easily feasible as there are significant differences between the local and the international standards.
This study highlights the most problematic points in the current reporting practice, shows the level of variety in presentation of the primary statements in the companies’ financial statements and exemplifies which critical judgments and key estimations executives consider to be the most significant in the financial statements.