Do We Need a New Approach to R&D Works in Financial Reporting?

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Open Access

|Oct 2024

Figures & Tables

Characteristic	Number	% Share	Comments
low level of analysis of the presented data	6	25%
average level of analysis of the presented data	8	33%
high level of analysis of the presented data	10	42%
obligation to conduct R&D works and their commercialization	13	54%	three countries easing this requirement
preliminary acceptance of works by external institutions	7	29%
Funding for RD works work	24	100%
Availability of other tax incentives for applying R&D work	22	92%

Costs included in the cost of production	Costs not included in the cost of production
1) materials and services used to produce the component, 2) benefits for employees related to production, 3) fees for registration of legal title, 4) depreciation of patents and licenses used in production.	1) sales costs, 2) administration costs, 3) general plant costs, 4) costs resulting from lack of efficiency and initial operating losses incurred before achieving planned efficiency, 5) expenditure incurred to train employees to operate the component.

	Balance Sheet Total	Sales Revenues	Gross Profit	Net Profit
Overall Materiality Value	1–2 %	0.5–1.0%	5%	5–10%

Hypothesis	Dependent Variable	Group Membership	Sector Affiliation	Refief in Past	Refief in the Future	Chi-Square	DF	P-Value	Hypothesis Verification	V-Cramer
H1	knowledge of balance sheet law	junior accountant				2.67	6	0.849	rejected
		senior accountant
		chief accountant
		management of the entity (management board, supervisory board)
H2	knowledge of tax law provisions	junior accountant				4.25	3	0.236	rejected
		senior accountant
		chief accountant
		management of the entity (management board, supervisory board)
H3	the need to create a new accounting standard for R&D works		services			1.56	3	0.667	rejected
			trade
			production
			other
H4	tax inspection			Yes		7.41	1	0.006	confirmed	0.568
H4	tax inspection			No		7.41	1	0.006	confirmed	0.568
H5	expenses questioned			Yes		2.07	1	0.150	rejected
H5	expenses questioned			No		2.07	1	0.150	rejected
H6	distortion of the financial statements				Yes	0.873	1	0.350	rejected
H6	distortion of the financial statements				No	0.873	1	0.350	rejected

Survey Questionnaire	Detailing	Category	N	%
Q1	Sector	services	15	46.9 %
		production	5	15.6 %
		trade	6	18.8 %
		other	6	18.8 %
Q2	Experience	0–1y	12	37.5 %
		1–4y	9	28.1 %
		4–7y	2	6.3 %
		up to 7y	9	28.1 %
Q3	Position	Junior Accountant	18	56.3 %
		Senior Accountant	6	18.8 %
		Chief Accountant	2	6.3 %
		Managing Person	6	18.8 %
Q4	Relief in Past	No	24	75.0 %
Q4	Relief in Past	Yes	8	25.0 %
Q5	Since Relief	from 2020	1	12.5 %
		from 2021	2	25.0 %
		from 2022	2	25.0 %
		earlier than 2020	3	37.5 %
Q6	Economic Benefits	No	5	15.6 %
		Yes	6	18.8 %
		No opinion	21	65.6 %
Q7	Record	small extent	19	59.4 %
		enough	3	9.4 %
		good	6	18.8 %
		very well	4	12.5 %
Q8	Provisions of the Balance Sheet Law	Yes	5	15.6 %
		No	5	15.6 %
		difficult to determine	22	68.8 %
Q9	Standard	No	12	37.5 %
Q9	Standard	Yes	20	62.5 %
Q10	Tax Law Provisions	Yes	8	25.0%
		No	14	43.8%
		difficult to determine	10	31.3%
Q11	Tax Inspection	No	16	69.6 %
Q11	Tax Inspection	Yes	7	30.4 %
Q12	Claim Expenses	No	18	81.8 %
Q12	Claim Expenses	Yes	4	18.2 %
Q13	Incorrect Expenses	No	17	81.0 %
Q13	Incorrect Expenses	Yes	4	19.0 %
Q14	Tax Relief	No	14	66.7 %
Q14	Tax Relief	Yes	7	33.3 %
Q15	Manipulation of Financial Results	No	16	80.0 %
Q15	Manipulation of Financial Results	Yes	4	20.0 %
Q16	Making a Correction	No	11	84.6 %
Q16	Making a Correction	Yes	2	15.4 %
Q17	Financial Statements Distortion	No	12	70.6 %
Q17	Financial Statements Distortion	Yes	5	29.4 %
Q18	Creative Accounting	No	11	34.4 %
Q18	Creative Accounting	Yes	21	65.6 %

Specification	Accounting Act	IAS
item	cost of completed development work	cost of research work, cost of development work
method of recognizing expenditure on research work	no regulation – in accordance with Art. 10 section 3 of the Accounting Act possible reference to IAS	costs of a given period
method of recognizing expenditure on development works	activated as active accruals	costs of the period when they do not meet the definition of assets or are capitalized in intangible assets

Hypothesis	Research Question	Linking to the Survey Questionnaire
H1	Q1	3 and 8
H2	Q2	3 and 10
H3	Q3	1 and 9
H4	Q4	4 and 11
H5	Q5	4 and 12
H6	Q6	14 and 17

Research works	Development works
1) they strive to acquire new knowledge, 2) searching, assessing and selecting ways to use research work, 3) searching for alternative materials, products, processes, 4) formulation, design and final evaluation of the results of discovery work.	1) design, construction and testing of experimental models before implementation into production, 2) designing tools, devices and moulds using new technology, 3) design, construction and operation of a trial line, the size of which does not enable economic production intended for sale, 4) designing or testing selected solutions in the field of new or improved products, processes, materials.