New Interpretation of the National Accounting Board I-49

The following article briefly summarises the main points of the new interpretation of the National Accounting Board I-49 “Recognition and Measurement of Liquid Valuables”.

Interpretations of the National Accounting Board

The interpretations provide NAB’s professional opinion on the practical application of Czech accounting principles. They aim to facilitate the formulation of optimum and unified procedures for accounting and financial reporting. The interpretations focus on matters that are not addressed by Czech accounting legislation or are addressed insufficiently, and on issues being resolved differently in the accounting practice.

Even though the interpretations are not legally binding, the Supreme Administrative Court has accepted them several times as a valuable source complementing the accounting legislation.

Interpretation I-49 Recognition and Measurement of Liquid Valuables

Interpretation I-49 (hereinafter the “Interpretation”) was issued in March 2024 and basically deals with the following three issues:

  • Are all valuables reported as Cash on hand?
  • How do we measure valuables, which do not include a statement of their nominal value in a valid currency?
  • Which foreign currency valuables are translated to Czech currency as of the balance sheet date?

Recognition of valuables and receipts in the balance sheet

The current accounting legislation does not define the term “valuables”, CAS 016 only includes examples of valuables, which are reported within group 21 – Cash on hand (stamps, mandatory alcohol marking tapes, duty stamps, vignettes, meal vouchers).

The interpretation distinguishes between “valuables” (ceniny) and “receipts” (potvrzení).

Valuables are similar to cash equivalents, i.e. they are easily and readily exchangeable for a cash amount known in advance (usually within three months) or can be used directly for the purchase of previously undefined goods or services. As an example of such valuable, the Interpretation refers to tobacco labels or meal vouchers).

According to the Interpretation, valuables are reported as cash on hand in the balance sheet.

Other asset values and instruments that cannot be considered as valuables are marked as “receipts” and their reporting in the balance sheet depends on the purpose of their use:

  • Receipts issued as a proof of payment of particular goods, services, taxes or fees are recorded before their sale in the sub-ledger accounts.
  • Receipts purchased for the purpose of resale are reported as goods.
  • Receipts received as a proof of prepayment of goods, services, taxes or fees from the issuer are reported as prepaid goods, services, taxes and fees. Pursuant to the Interpretation, such receipts include e.g. post stamps, flight tickets, fare tickets, prepaid phone cards or meal vouchers (acquired as an employee benefit).

In the cash flow statement, only valuables are considered as cash.

Measurement of valuables and receipts

Pursuant to the Interpretation, valuables are stated at their nominal value.

Issued receipts are stated at own costs by the issuer; the distributor and the end user state the receipts at their acquisition costs.

The Interpretation specifies that the „receipt, which do not include a statement of their nominal value in a valid currency but in other units (e.g. units of goods or services to be drawn in exchange for the receipt in the future) are stated at acquisition cost. The subsequent change in the price of services or goods for which the receipt has been issued, does not give a reason to change the valuation of such receipt.“ This is an example of e.g. post stamps issued by the Czech Post, the nominal value of which is designated by letters (e.g.  A, B, E).

Translation of valuables in a foreign currency

Pursuant to the Interpretation, only valuables denominated in a foreign currency, which are reported as cash on hand and are subject to a foreign exchange rate risk are translated to the Czech currency at the balance sheet date.

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