Supervision of Financial Reporting Through the Prism of the Regulatory Framework and Practice in the Republic of Serbia

  • Sunčica Milutinović University of Novi Sad Faculty of Economics in Subotica
  • Ivana Medved University of Novi Sad Faculty of Economics in Subotica
Keywords: Comparability, Harmonization, Regulatory framework, Financial reporting, Internal supervision, Regulation,

Abstract


The paper presents the research in the field of internal supervision in financial reporting in the private sector of the Republic of Serbia. In the first part of the paper, legal regulations and current international regulations are compared. The aim of this study was to evaluate the achieved level of harmonization between the national and international regulatory framework in the field of financial reporting. The second part of the paper presents the analysis of the effect of the internal supervision in financial reporting on comparability of financial statements in terms of consistent application of the regulatory framework. The study aimed at examining whether internal supervision affects the comparability of financial statements. The methodology of the research that was used in the processing of data obtained through the questionnaire consisted of One-Factor Analysis of Variance, Pearson's correlation coefficient, and Spearman's and Kendall's rank correlation coefficient. The sample included 297 employees working on accounting and/or audit positions of the private sector of the Republic of Serbia. The results showed a (partial) non-compliance of domicile regulations with EU regulations, i.e. that the national regulatory framework is not harmonized with international regulatory framework. In addition, the results indicated that the internal supervision, defined both in domicile and EU regulations, contributes to the comparability of financial statements in terms of consistent application of the regulatory framework.


Author Biographies

Sunčica Milutinović, University of Novi Sad Faculty of Economics in Subotica
Department of Finance, Banking, Accounting and Auditing
Ivana Medved, University of Novi Sad Faculty of Economics in Subotica
Department of Finance, Banking, Accounting and Auditing

References

Abbott, L. J., Daugherty, B., Parker, S., & Peters, G. F. (2016). Internal audit quality and financial reporting quality: The joint importance of independence and competence. Journal of Accounting Research 54(1), 3-40. doi: 10.1111/1475-679X.12099

Altamuro, J., & Beatty, A. (2010). How does internal control regulation affect financial reporting? Journal of Accounting and Economics 49(2010), 58–74. doi:10.1016/j.jacceco.2009.07.002

Azzali, S., & Mazza, T. (2013). Internal control over financial reporting quality and information technology control frameworks. In D. Mancini, E. H. J. Vaassen & R. P. Dameri (Eds.), Accounting information systems for decision making (pp. 47-62). Berlin, Germany: Springer International Publishing AG.

Bardhan, I., Lin, Sh., & Wu, Sh. L. (2015). The quality of internal control over financial reporting in family firms. Accounting Horizons 29(1), 41-60. doi: http://dx.doi.org/10.2308/acch-50935

Bentley-Goode, K. A., Newton, N. J., & Thompson, A. (2015). Business strategy and internal control over financial reporting. Retrieved from: http://ssrn.com/abstract=2637688 or http://dx.doi.org/10.2139/ssrn.2637688

Dobija, D. (2015). Exploring audit committee practices: Oversight of financial reporting and external auditors in Poland. Journal of Management & Governance 19(1), 113-143. doi: 10.1007/s10997-013-9281-6

Doyle, J., Ge, W., & McVay, S. (2007). Determinants of weaknesses in internal control over financial reporting. Journal of Accounting and Economics 44(2007), 193–223. doi:10.1016/j.jacceco.2006.10.003

Feng, M., Li, Ch., McVay, S., & Skaife, H. (2015). Does ineffective internal control over financial reporting affect a firm's operations? Evidence from firms' inventory management. The Accounting Review 90(2), 529-557. doi: 10.2308/accr-50909

Ge, W., Li, Z., Liu, Q., & McVay, S. (2016). When does internal control over financial reporting curb resource extraction? Evidence from China. Retrieved from: http://ssrn.com/abstract=2704663 or http://dx.doi.org/10.2139/ssrn.2704663

IASB. (2010). Conceptual Framework for Financial Reporting. London: Author.

Isaac, A. (1951). Revision und wirtschaftsprüfung. Wiesbaden: Gabler Verlag.

Klikovac, A. (2009). Financijsko izveštavanje u Europskoj uniji. Zagreb: Mate.

Marinovic, I. (2013). Internal control system, earnings quality and the dynamics of financial reporting. The RAND Journal of Economics 44(1), 145-167. doi: 10.1111/1756-2171.12015

Miletić, D. (2014). Cash flow statement: Assessment of situation and application problems in Serbia. Industrija, 42(4), 99-114.

Ministarstvo finansija RS. (2014). Informator o radu Ministarstva finansija. Belgrade: Author. Retrieved from http://www.mfin.gov.rs

Mitrović, S. (2013). Institucionalni regulatorni okvir kao uslov kvaliteta finansijskog izveštavanja u Srbiji. Zbornik radova 44. simpozijuma Računovodstveno regulatorno okruženje: podsticaj ili ograničenje privrednog rasta. Belgrade: Association of Accountants and Auditors of Serbia.

Official Gazette of RS. (2013). Accounting Law (62/2013). Belgrade: Author.

Official Gazette of RS. (2016). Law on Tax Procedure and Tax Administration (80/2002, ... 15/2016). Belgrade: Author.

Stojanović, R., & Petrović, P. (2013). Novi zakon o računovodstvu (opšte napomene). Računovodstvena praksa, 16-17/13.

Šabović, Š. (2011). Primena Međunarodnih računovodstvenih standarda u zemljama u razvoju u uslovima krize. Ekonomika, 2.

Published
2017/05/12
Section
Original Scientific Paper