Financial statements risk: case study of a small accounting unit

Accounting records constitute the basic information sources for various groups of users. The quality of information acquired may considerably affect their decision-making based on accounting data and information reported. The focus of this contribution is laid on the CFEBT method of risk detection of accounting records from the view of a risk of accounting errors and frauds, with a result in the reduction in the information asymmetry between their authors and users. The main article objective is to analyze the risk of accounting errors and frauds through CFEBT risk triangle and a case study of selected small entities which operate predominantly in processing industry. The CFEBT risk triangle was designed as a tool for detection, evaluation and management of the risk of accounting errors and frauds in circumstances of the Czech accounting standards and International Financial Reporting Standards (IFRS). The case study results that it was ascertained that the most significant discrepancy between the economic substance of the business activity of the accounting unit and the generation of cash flow is a consequence of reported financial revenues