Problems of Reliability and Informality in Financial Reporting of SME


1Faculty of Economy and Agribusiness, Agricultural University of Tirana

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The preparation of financial reporting in our country is regulated by Law No. 9228 “On Accounting and Financial Statements” of 2004. This law was formulated in the spirit of international accounting standards by authorizing the regulation of accounting with Accounting Standards [1] , which started to apply in January 2008 by all units with profit that operate in our country. According to the first standard of accounting which represents important principles of preparation of financial reporting, the financial statements should provide all the information necessary, complete and realistic financial position of the entity and to be unaffected during the preparation from its makers or menagement. But does it really happen to implement these principles during the preparation of financial statements, or economic units did not report complete financial situation, so there is informality? Exactly, the answer to that question constitutes the main purpose of this paper. This will be realized by the processing of data insured through a questionnaire addressed to tax inspectors in the district of Tirana, Lezhes and Peshkopi. The results showed that over 80% of entities controlled by inspectors , who participate in the questionnaire, have resulted that they do not fully report income and apply other prices from the real prices in tax bills. Also the results showed that over 70% of cases, the information reported in the financial statements is influenced by management or also by the drafters of the financial statements with the approval of the menagement. So the results indicated that the problems of informality in the financial reporting are present according to tax inspectors.

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