Auditor's insight on prudence principle application in Czech SMEs

The paper deals with the creating of provisions, impairment and depreciation of fixed assets in SMEs from the auditor's perspective. Prudence principle belongs to traditionally generally accepted accounting principles and is closely linked with another accounting principle - going concern in the foreseeable future. Both of these accounting principles, based on which accounting systems are built, have one common denominator; it is measurement as one of the basic methodological elements of accounting. The fundamental problem in the use of the above instruments of prudence principle in SMEs is a strong dependency of accounting of the companies on tax incidences