<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Investors have become the most important users of financial statements in modern business conditions, and mixed base of financial reporting has been established in order to meet their information needs and it includes elements of the concept of historical cost and the fair value concept, with an increasing shift towards the fair value concept. The primary task of fair value accounting becomes the expression of the fair value of the net assets at the reporting date, while the financial results represent the change in fair value of net assets between the two reporting periods. In our country the application of the "full IFRS" is mandatory for large enterprises and the application of IFRS for SMEs is mandatory for small and medium-sized entities, thus fair value accounting becomes an integral part of the financial statements of domestic companies. However, fair value accounting is not a suitable concept for our country characterized by shallow and underdeveloped financial market, companies whose owners are the company managers at the same time, and low level of economic and technological development. A financial statement audit in terms of the use of the fair value concept becomes much more demanding and complex than the audit of the financial statements based on historical cost accounting.</p></abstract>

Investors have become the most important users of financial statements in modern business conditions, and mixed base of financial reporting has been established in order to meet their information needs and it includes elements of the concept of historical cost and the fair value concept, with an increasing shift towards the fair value concept. The primary task of fair value accounting becomes the expression of the fair value of the net assets at the reporting date, while the financial results represent the change in fair value of net assets between the two reporting periods. In our country the application of the "full IFRS" is mandatory for large enterprises and the application of IFRS for SMEs is mandatory for small and medium-sized entities, thus fair value accounting becomes an integral part of the financial statements of domestic companies. However, fair value accounting is not a suitable concept for our country characterized by shallow and underdeveloped financial market, companies whose owners are the company managers at the same time, and low level of economic and technological development. A financial statement audit in terms of the use of the fair value concept becomes much more demanding and complex than the audit of the financial statements based on historical cost accounting.

Fair Value Concept Specifics in Financial Reporting and Auditing

University of Niš, Faculty of Economics, Serbia

Economic Themes

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Fair Value Concept Specifics in Financial Reporting and Auditing"}

Investors have become the most important users of financial statements in modern business conditions, and mixed base of financial reporting has been...

Fair Value Concept Specifics in Financial Reporting and Auditing

Published Online: Apr 15, 2016

Page range: 119 - 141

Received: Feb 15, 2015

Accepted: Apr 03, 2015

DOI: https://doi.org/10.1515/ethemes-2015-0008

Keywords
fair value concept, IAS / IFRS, IFRS 13: Fair Value Measurement, financial statement audit

© 2016

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Fair Value Concept Specifics in Financial Reporting and Auditing

Published Online: Apr 15, 2016

Page range: 119 - 141

Received: Feb 15, 2015

Accepted: Apr 03, 2015

DOI: https://doi.org/10.1515/ethemes-2015-0008

Keywordsfair value concept, IAS / IFRS, IFRS 13: Fair Value Measurement, financial statement audit

© 2016

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
fair value concept, IAS / IFRS, IFRS 13: Fair Value Measurement, financial statement audit