The Effect of Conservatism and Precautionary Principles on the Reporting Practices of Economic Entities

Decisions of various stakeholder groups are no longer based exclusively on financial reporting. The global changes and multidimensional pressures (social, environmental, political, cultural, economic, etc.) have led to a stringent need to rethink the reporting processes. These take a variety of forms, ranging from "conventional" financial statements to the relatively recent reporting practices such as CSR reporting and value reporting. The present paper aims to analyze the effect generated by the application of two principles - conservatism (the differential verifiability required for recognition of profits versus losses) and precautionary (action to reduce environmental impact should not be delayed because of scientific uncertainty) - on various reporting practices