Accounting and Tax Implications of the Creation and Use of Technical Provisions of Commercial Insurance Companies
| Authors | |
|---|---|
| Year of publication | 2013 |
| Type | Article in Periodical |
| Magazine / Source | Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis |
| Citation | |
| Web | http://acta.mendelu.cz/ |
| Field | Management and administrative |
| Keywords | precautionary principle, commercial insurance company, technical provision |
| Description | Entities such as commercial insurance companies are obliged to create technical provisions in orderto fulfi ll their activities. Technical provisions are used to cover liabilities of commercial insurance companies arising from insurance and reinsurance activities. The principal aim of this paper is to determine the impact of the creation and use of technical provisions for some important items of the fi nancial statements, which are liabilities, a balance sheet, profi t and an income tax base. A prerequisite to fulfi ll the objective of the paper is to analyze the accounting legislation for technical provisions in an insurance company. The intention of the presented paper can be divided according to its conception into two parts. The fi rst part of the paper is devoted to methodological aspects in relation to the general defi nition of the accounting principles and their importance in the accounting of commercial insurance companies. The second part deals with the methodological procedure of the accounting of the creation and use of technical provisions and the specifi cs of how they are reported in the fi nancial statements of commercial insurers. Conclusions of the paper show contemporary issues in the analyzed area in the context of the financial crisis. |