This paper aims at investigating the existence of accounting heredity in some of Eastern European countries. Accounting heredity assumes that at the time the economic paradigm changes, a new accounting system emerges, enclosing both genes from the existing accounting system, as well as genes from a new accounting system used as an inspiration. Data was gathered by sending questionnaires to academics in the respective countries. Studied countries fell into two categories: Ex Soviet countries (Republic of Moldova & Ukrane), and other Est European countries (Romania, Republic of Macedonia and the Czech Republic). It analyses the survival of communist accounting practices in the post-1990 accounting systems and identifies other eternal influences that shaped these accounting systems.Accounting Heredity, Accounting Change, Accounting Genes, Eastern European Countries, Accounting History

Artemisa Calu Daniela

Guse Gina Raluca

Olimid Lavinia

Ristea Mihai

English

Research Papers in Economics

1445 
A COMPARTIVE STUDY ON ACCOUNTING HEREDITY: THE 
CASE OF EX SOVIET COUNTRIES VERSUS OTHER EASTERN 
EUROPEAN COUNTRIES
394 
Ristea Mihai  
Academy  of  Economic  Studies  Bucharest,  Faculty  of  Accounting  and  Management  Information 
Systems, Pia￿a Roman￿, nr. 6, sector 1, Bucure￿ti, mihai.ristea@yahoo.com 
Artemisa Calu Daniela  
Academy  of  Economic  Studies  Bucharest,  Faculty  of  Accounting  and  Management  Information 
Systems,  Str.  Bozieni,  nr.  8,  bl  831,  sc.  1,  ap.  511,  sector  6,  Bucure￿ti,  danielacalu@yahoo.com, 
0726373003 
Olimid Lavinia  
Academy  of  Economic  Studies  Bucharest,  Faculty  of  Accounting  and  Management  Information 
Systems,  Str.  Matei  Basarab  nr.  108.  Bl  .  74,  Ap.  63,  Sector  3,  Bucure;ti,  l.olimid@gmail.com, 
0721551137 
Gu￿e Gina Raluca 
Academy  of  Economic  Studies  Bucharest,  Faculty  of  Accounting  and  Management  Information 
Systems,  Str.  Bozieni  nr.  8,  bl  831,  sc.  1,  ap.  906,  sector  6,  Bucure￿ti,  guseraluca@gmail.com  , 
0722776971 
 
Abstract:  This  paper  aims  at  investigating  the  existence  of  accounting  heredity  in  some  of  Eastern 
European countries. Accounting heredity assumes that at the time the economic paradigm changes, a new 
accounting system emerges, enclosing both genes from the existing accounting system, as well as genes 
from a new accounting system used as an inspiration. 
Data  was  gathered  by  sending  questionnaires  to  academics  in  the  respective  countries.  S-au  primit 
r￿spunsuri din 5 ￿￿ri. Studied countries fell into two categories: Ex Soviet countries (Republic of Moldova 
& Ukrane), and other Est European countries (Romania, Republic of Macedonia and the Czech Republic). 
It  analyses  the  survival  of  communist  accounting  practices  in  the  post-1990  accounting  systems  and 
identifies other eternal influences that shaped these accounting systems. 
Keywords : Accounting Heredity, Accounting Change, Accounting Genes, Eastern European Countries, 
Accounting History 
The research Conceptual Framework  
Calu (2005) proposed a genetics approach to changes occurred when a new accounting systems is adopted 
due to changes in the economic and political environment, emphasizing the notion of heredity
395. The 
premise is: the emergence of a new accounting system (in splitting points) requires the existence of two 
“parents”:  present  international  accounting  reality,  and  the  previous  status,  meaning  the  national 
accounting  history.  The  main  mechanism  consists  of  the  transmitting  of  concepts  (genes)  from  one 
accounting systems generation to another involves the existence of dominant genes (that are manifest from 
the start, in the case of a new accounting system) and recessive
396 genes (that become manifest after a 
certain amount of time). Therefore, when a new accounting system emerges, accounting concepts and 
practices not found at any of the parents could have operated previously. Also, former accounting concepts 
and practices can be reactivated during the accounting system’s existence. Although we borrow concepts 
                                                            
394 Research financed by CNCSIS, grant IDEI 797/2007 “Development of Romanian Accounting Regulation Between 
Heredity and Tanatogenesis ». 
395  In  a  strict  biological  sense,  heredity  is  the  characteristic  feature  of  animate  beings  to  pass  down  genetic 
characteristics  to  their  offspring.  In  a  general  sense,  the  notion  can  be  defined  as  the  propriety  of  a  thing  or 
phenomenon to depend on momentary actions and prior successive conditions. 
396 According to Calu (2005), the meaning of this term differs form its original meaning. In biology, a recessive gene 
becomes manifest after one or more generations, as « the segregation law » states. 1446 
and the general mechanism from genetics, this approach to accounting history does not entirely superpose 
to the heredity mechanisms in biology. 
When a new accounting system is conceived, the fertilization takes place “in vitro”. Multiple embryonic 
variants are abandoned at different development stages up to the time when a certain viable embryo is 
selected  to  be  implanted  in  the  economic  environment.  Subsequently,  given  no  splitting  points  in  the 
economic environment, the interventions upon the accounting system are similar to genetic changes made 
in order to acquire a transgenic
397 organism. 
Research hypotheses and data analysis 
Our research framework hypotheses are the following: 
H1:  The  assimilation  of  one  of  the  new  embryos  in  the  new  economic  environment  generates  the 
emergence of a new child – accounting – system which takes over genes from existing parents; 
H2:  At  economic  continuity  moments,  there  are  two  types  of  changes  that  can  be  brought  upon  an 
accounting system: 
−  certain recessive genes become manifest; 
−  genetic alterations are made in order to improve future generations. 
This paper aims at demonstrating the above hypotheses during the period that followed the collapse of the 
socialist economy, that is, the years 1989-1990 in several Eastern European countries (Romania, Republic 
of Moldova, Republic of Macedonia,  the Czech Republic and Ukrane).  Data was gathered by sending 
questionnaires to academics in the respective countries.  The questionnaire was emailed to accounting 
academics in Eastern European countries during the month of March 2008. We have received replies from 
academics in the following countries: Moldova, Republic of Macedonia, the Czech Republic and Ukrane. 
For the study of the Romanian case, we used as research method the oral history and historiography.  
H1:  The  assimilation  of  one  of  the  new  embryos  in  the  new  economic  environment  generates  the 
emergence of a new child – accounting – system which takes over genes from existing parents 
To  demonstrate  this  research  hypothesis,  we  analysed  genes  transmitted  from  the  previously  existing 
accounting systems in the four countries as to financial statements and accounting practices. 
No  Elements 
Other Eastern European Countries  Ex Soviet Countries 
Romania  Republic of 
Macedonia 
Czech 
Republic 
Republic of 
Moldova  Ukrane 
1.    Balance Sheet  Yes  Yes  Yes  Yes  Yes 
2.    Profit & Loss Account  Yes  Yes  Yes  Yes  Yes 
3.    Accounting  Policies  (Descriptive 
information) 
No  No  Yes  No  No 
4.    Notes   Yes  Yes  Yes  No  No 
5.    Statement  of  most  important 
economic indicators  
No  No  No  No  No 
6.    Directors Report   Yes  No  No  No  No 
7.    Cash Flows Statement  No  No  No  No  No 
8.    Statement of Changes in Equity  No  No  No  No  No 
9.    Other…………………  No  No  No  No  Yes
398 
The content of financial statements after the collapse of the socialist economy 
We note that all countries display the same numerical emphasis of the financial statements (balance sheet, 
profit and loss account and in certain cases notes), a gene characteristic to previously existing accounting 
                                                            
397 A transgenetic organism contains one or more artificially induced genes. 
398 Statement of Financial Position (some note for Balance Sheet). 1447 
systems. The lack of descriptive information, such as accounting policies and the absence of cash flow 
statement  and  the  statement  of  changes  in  capital,  confirm  the  existence  of  hereditary  traits  from  the 
previously existing accounting system. 
We also note that in former countries from the Ex Soviet area of influence, immediately after the collapse 
of the communist regime, disclosure of financial and accounting information was weak due to the limited 
requirements for presentation: The Balance Sheet and The Profit and Loss Account. In Ukrain, there was 
only an emerging form of additional disclosure, unlike the former Socialist countries that were not a part of 
the  USSR  area  of  influence,  where  Notes  to  Financial  Statements  existed  form  the  beginning,  which 
indicates a higher degree of transparency. 
No  Elements 
Other Eastern European Countries  Ex Soviet Countries 
Romania  Republic of 
Macedonia 
Czech 
Republic 
Republic of 
Moldova  Ukrane 
1.  The  existence  of  a  “chart  of 
accounts”  Yes  Yes  Yes  Yes  Yes 
2.  Valuation of Goods for Resale at 
retail price  Yes  Yes  No  Yes  Yes 
3.  Mandatory  set  up  of  a  fund  of 
same amount as depreciation in 
order to maintain the production 
capacity 
Yes  No  No  No  Yes 
4.  Use  of  a  specific  account  for 
transportation  costs  on  the 
purchase of an asset 
No  No  No  Yes   Yes 
5.  Use  of  a  specific  account  (for 
example «small tools») for assets 
with  a  lifespan  longer  than  1 
year, but  with a value less than 
the legal limit for fixed assets (or 
viceversa). 
Yes  No  Yes  Yes  Yes 
6.  Distinct  recognition  of  small 
tools  depreciation  on  their 
lifespan 
Yes  Yes  Partial 
existence  Yes  Yes 
7.  Valuation  of  the  stocks  of 
finished  goods  at  full  cost 
(including  administrative  and 
distribution expenses)  
Yes  Yes  Yes  No   Yes 
8.   Only legal reevaluation of fixed 
assets  Yes  Yes  Yes  Yes 
Yes 
 
9.  Recognition  of  the  revenues  at 
the time of cash collection  No  Partial 
existence  No  Yes  Yes 
10.  The  existence  of  alternative 
inventories’  valuation  methods 
(First  In  First  Out  Method  - 
FIFO, Last In First Out Method 
– LIFO)  
Yes  Yes  Yes  No  No 
11.  The  existence  of  alternative 
depreciation  methods  (straight 
Yes  Yes  Yes  No  No 1448 
line method, declining method or 
other) 
12.  The  existence  of  specific 
accounts  to  recognize  
impairments of assets (fair value 
lower than the book value) 
Yes  No  Yes  No  No 
13.  The  existence  of  specific 
accounts  to  recognize  the 
provisions (probable liabilities) 
Yes  No  Yes  No  No 
The features exist in accounting system in the first years after the socialist economy 
The first nine characteristics in table 5, genes specific to the socialist accounting system, were mostly 
transmitted in at least two of the four countries concerned. The exception is the use of a specific account 
for transportation costs on the purchase of an asset. 
The characteristics 10 to 13 in table 5, genes nonexistent in the socialist accounting system manifested 
themselves in the three countries where a process of creating a new accounting system: Romania, Republic 
of Macedonia and the Czech Republic. Due to the delayed reform (1998) in the Republic of Moldova and 
1999 in Ukrane, the international genes (positions 10-13) are not characteristic to the accounting system 
from Ex Soviet countries  at the beginning of the 1990s.  
H2:  At  economic  continuity  moments,  there  are  two  types  of  changes  that  can  be  brought  upon  an 
accounting system: 
−  certain recessive genes become manifest; 
−  genetic alterations are made in order to improve future generations. 
To investigate this hypothesis, we analysed the genetic changes that occurred from the collapse of the 
socialist economy to date. 
 
No  Elements 
Other Eastern European Countries  Ex Soviet Countries 
Romania  Republic of 
Macedonia 
Czech 
Republic 
Republic of 
Moldova  Ukrane 
1.  Balance Sheet 
Yes  Yes  Yes  Yes 
Yes 
 
2.  Profit & Loss Account 
Yes  Yes  Yes  Yes 
Yes 
 
3.  Accounting Policies (Descriptive 
information)  Yes  Yes  Yes  Yes 
Yes 
 
4.  Notes   Yes  Yes  Yes  Yes  Yes 
5.  Statement  of  most  important 
economic indicators  
Included in 
the notes  Yes  No  No  No 
6.  Directors Report   No  No  No  No  No 
7.  Cash Flows Statement  Yes  Yes  No  Yes  Yes 
8.  Statement of Changes in Equity  Yes  Yes  No  Yes  Yes 
9.  Other…………………  No  No  No  No  No  
The content of the financial statements in our days 
Accounting  systems  in  all  countries  demonstrate  the  manifestation  of  a  new  gene  specific  to  the 
international financial reporting model, that is mandatory descriptive information in Romania, the Republic 
of Macedonia, the Republic of Moldova & Ukrane, two new financial statements appeared: Cash Flow 
Statement and Statement of Changes in Equity, representing genetic changes that occurred in time. 1449 
 
No  Elements 
Other Eastern European Countries  Ex Soviet Countries 
Romania  Republic of 
Macedonia 
Czech 
Republic 
Republic of 
Moldova  Ukrane 
1.  The  existence  of  a  “chart  of 
accounts”  Yes  Yes  Yes  Yes  Yes 
2.  Valuation of Goods for Resale 
at retail price  Yes  No  No  Yes  No 
3.  Mandatory set up of a fund of 
same  amount  as  depreciation 
in  order  to  maintain  the 
production capacity 
No  No  No  No  No 
4.  Use of a specific account for 
transportation  costs  on  the 
purchase of an asset 
No  No  No  Yes  No 
5.  Use of a specific account (for 
example  « small  tools»)  for 
assets  with  a  lifespan  longer 
than 1 year, but  with a value 
less  than  the  legal  limit  for 
fixed assets (or viceversa). 
No  No  Yes  Yes  No 
6.  Distinct  recognition  of  small 
tools  depreciation  on  their 
lifespan 
No  No  No  Partial 
existence   Yes 
7.  Valuation  of  the  stocks  of 
finished  goods  at  full  cost 
(including  administrative  and 
distribution expenses)  
No  No  Yes  No   No 
8.  Recognition of the revenues at 
the time of cash collection  No  No  No  No    
9.   Only  legal  reevaluation  of 
fixed assets  Yes  No  Yes  No   No  
10.  The  existence  of  alternative 
inventories’ valuation methods 
(First  In  First  Out  Method  - 
FIFO,  Last  In  First  Out 
Method – LIFO.)  
Yes  Yes  Yes  Yes  Yes 
11.  The  existence  of  alternative 
depreciation methods (straight 
line method, declining method 
or other) 
Yes  Yes  Yes  Yes  Yes 
12.  The  existence  of  specific 
accounts  to  recognize  
impairments  of  assets  (fair 
value  lower  than  the  book 
value) 
Yes  Yes  Yes  No  Yes 
13.  The  existence  of  specific 
accounts  to  recognize  the 
Yes  Yes  Yes  No   Yes 1450 
provisions  (probable 
liabilities) 
The features exist in contemporary accounting systems 
The analysis of the evolution of accounting practices from the beginning of the 1990s to date demonstrates 
the disappearance of the genes specific to the socialist accounting system with certain exceptions (e.g. 
valuation  of  Goods  for  Resale  at  retail  price  in  Romania  and  the  legal  revaluation  of  fixed  assets  in 
Romania and the Czech Republic). 
3. Conclusions 
Following the collapse of the socialist economy, we note a process of creation of a new accounting system 
in three of the countries analysed. The parents of this new accounting system are the accounting past and 
the international accounting present. On the other hand in the Republic of Moldova and Ukrane as a former 
USSR republic, environmental (cultures) factors delayed this process and during that time an accounting 
system similar to the previous one was used. 
References: 
1.  Calu, D.A. (2005) Istorie ￿i dezvoltare privind contabilitatea din România, Bucure￿tit, Ed.  
Economica  
2.  Calu,  D.A. et al. (2008)  Is there Accounting Heredity in Romania?, 12 th World Congress of 
Accounting Historians, Istambul, Turkey 20-24 July 2008 
3.  Calu, D.A.  et al. (2008)  Is there Accounting Heredity in Eastern European Countries, AMIS, 
Bucharest 19-20 June 2008 
4.  Feleag￿, N., Iona￿cu, I. (1993) Contabilitate financiar￿, Ed. Economic￿, Bucure￿ti 
5.  Richard, J. (1995) „The evolution of the Romanian and Russian accounting charts after the 
collapse of the communist system”, The European Accounting Review, Vol.  4, No 2: 305 - 
322  
6.  Ristea, M. (1995) Contabilitatea societ￿￿ilor comerciale, vol. I, Ed. CECCAR, Bucure￿ti 
7.  Walton, P. (1995) International accounting and history in European Financial Reporting. A 
History, edited by Walton P., Academic Press Limited 
 
 

A comparative study on accounting heredity: the case of ex soviet countries versus other eastern european countries

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A comparative study on accounting heredity: the case of ex soviet countries versus other eastern european countries

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